[mrb]

This operation currently mines about $262k per month:

230e9 (each machine does 230 Ghash/s) * 2500 (# of machines) * 3600 (second/hour) * 730 (hour/month) / (2^32 (average number of hashes to solve a block at diff=1) * 19.8e9 (current Bitcoin difficulty)) * 25 (BTC/block) * 590 (USD/BTC) = $262000/month

The article says their electricity bill is $60k per month. Subtract the 3 employees salaries, say $5k per month (this is China). So you are looking at a pure profit of $197k per month. Of course these profits are declining quickly over time; look how fast the difficulty has been rising: http://bitcoin.sipa.be/speed.png (logarithmic scale!)

And this mine only represents 0.3% of the total network speed (about 170,000,000 Ghash/s).

Edit: bellerocky: most exchange fees are < 1% to turn BTC to fiat.

Edit: FigBug: roughly yes, but because the network is growing, there are more than 3600 coins mined per day (blocks are solved a bit more often than every 10min).

[miles]

The article says their electricity bill is $60k per month. Subtract the 3 employees salaries, say $5k per month (this is China). So you are looking at a pure profit of $197k per month.

Three other significant expenses worth considering: rent/physical plant, hardware, and taxes.

[contingencies]

In most cases in mainland China, no tax is paid and cash is king. Only if you are a large, visible company doing business with other large, visible companies do you need to get formalistic. Even then, double or triple sets of accounts are normal.

[seanmcdirmid]

I pay plenty of taxes. Heck, I pay the tax on my rent for a fapiao that gives me a tax benefit at work. The PRC is getting better about tax collection, though a lot of activity still goes on underground, especially those that are related to money laundering.

[bellerocky]

> So you are looking at a pure profit of $197k per month.

Not including liquidity issues and fees for turning that stuff into actual money, at least until you can start paying all your bills with bitcoin.

[Sambdala]

$200k/month is not going to run you into liquidity issues.

[pyre]

It's $200k/month worth of Bitcoin. The 'liquidity' we're talking about here is converting Bitcoin into local currency that you can purchase things with.

[jafaku]

Again, not a problem.

[vectorpush]

Possible, perhaps, "not a problem", seems pretty untrue. How exactly would someone go about cashing out $200k worth of bitcoin?

[venaoy]

Sell on an exchange. The big ones have a monthly trade volume of 100k+ BTC ($50+ million): http://bitcoinity.org/markets/list?currency=ALL&span=30d Clearly $200k is a drop in the bucket for them.

[anon4this1]

I sold $800k US of bitcoin on bitstamp market earlier this year - i did it over 30 minutes and it dropped the spot price about $6

[erikb]

I think for this kind of work $5k is already too much for three Chinese workers. Each worker about $500 and maybe some fees for the living room and food. If you pay $2k it might be fine.

If you pay $5k for such kind of 24/7 job in China you'll make a middle man very happy.

[yutah]

that doesn't include the cost of hardware but I guess it is negligible... and I thought mining was not profitable at current prices.

[wmf]

Mining tends to not be profitable if you pay retail prices for ASICs, but if you make your own ASICs it's still pretty profitable.

[vidarh]

It's not profitable for people with expensive electricity. Location matters greatly.

[FigBug]

If they have 0.3% speed, wouldn't it be expected that they get 0.3% of the coins per month?

3600 coins per day * 30 days * 588.41 BTC/UDS * 0.003 = $189831.60 USD gross per month?

[jedc]

How much would they have paid for 2500 machines that can do 230 Ghash/s each?

[epynonymous]

you forgot to include capital expenditures, asics are expensive.