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Crypto Mining vs, ATT Stock Dividends

Posted on Sep 4, 2018 by Paul White

Over the holiday Weekend I got a chance to spend some quality time with family.  The topics ranged from cars, to investing.  On the investing topic I shared my thoughts on crypto, which is always a huge risk being most people not in crypto have a hard time getting their heads around the concept.  My Uncle was more for slow and steady investing using high value stocks that pay dividends.  He had a great advice, but ultimately the returns from componding Dividents from ATT Stock doesn't come anywhere close to crypto.  I decided to work the math to give an example.

AT&T Stock

Has for several decades paid a healty quarterly dividend.  Today that dividend is 50 cents per share, and the price of AT&T stock is right at $33.  giving us an 6% return ( not including the compounding dividends ).  

Cryto Mining

Has only existed for about 10 years. Its a game where the higher values go, the more people get into mining, plus the evolution of new GPUs and hardware further reduce the power of your hardware.  

The comparision

For this simulation we are going to assume that the initial investment is $10,000.  And both AT&T and the value of said Cryptos remain flat. We are also going to assume that you are not a noobie when it comes to crypto mining, and you are very knowledgable about how to build miners, and source parts at the best posible value.

$10,000 buys 303 shares of AT&T stock.

$10,000 buys parts to build 2 x 8GPU mining Rigs with 1080 Tis ( used )

A 1080 Ti using an auto profit switching setup, will yield $1.40 / day.

Mining Setup Total Revenue $22.40 / day

Electrical Costs will be about 4000 watts, or about 96 KWH / day

At my KWH rate of 7 cents, that means it costs be $6.72 per day.

We also will figure an additional $3 / day to keep the miners air conditioned in the summer months, so that is $9.72 / day in over head costs, giving us a profit of $12.68.

Over the course of a month that is $393.08 Profits from mining.

Over the course of 3 months that is $1,179.24 Profits from mining.

After 3 months your 303 shares of AT&T stock would have paid you a dividend of $151.50

Of course with AT&T Stock you can easily liquidate and sell your shares.

With mining you have to take the time to list all your hardware for sale on ebay, then wait for auctions to close, buyers to pay, and then box up and ship all your hardware.  

After 3 months the value of your hardware is mostly based on what the crypto markets are doing.  IF we get into another mining boom where Bitcoin skyrockets to $20K. Then I could easily sell each of my 1080 Ti for about $800 a piece if not more.  But if we get further drops in crypto values, plus the release of newer GPUs, we can assume a good 15% depreciation in our hardware's value.  

We are going to assume the market stays flat in crypto, meaning normal depreciation of our hardware.  Which means our $10K in hardware is only worth $8500 now,  This means we have taken a loss.  

But if Bitcoin takes off to $20k again, Then our $10K in hardware will now be worth closer to $16K, plus the appreciation of our mining revenue will also be increased from the $1180 to closer to $3000.  This is because miners don't hold their earnings in USD. The hold them in BTC.  

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