I have a friend who is in IT and him and three buddies are going big into crypto mining. They claim a decent machine is around 2K and will generate $500 per month in bitcoins. They plan to start with 4 machines running out of one of their houses and then double each time they get payback on one machine. Eventually when they hit 16 or 32 or whatever they will move into a "commercial setting". I told him he is a complete idiot given there is no money to be made mining unless you are stealing the power or in an extremely low kw/h situation like in China or something like that. He is adamant he will be retired within three years. Perhaps i'm missing out on a big opportunity here?

Yes you are missing a big opportunity. What you do is bet your buddy as much money as you possibly can that it doesn't work out that way.

No you aren't missing out. I'm guessing the most successful bitcoin operations are in freezing cold places next to a dam where power is super cheap. A "decent" machine is around 2k but last I looked they were back ordered or out of stock everywhere. Net of costs how much are you profiting. What lifespan do you think this machine will have running at 100% before you need to replace it?

way more money in porn

lol on mining BTC with 4 machines...
If he is really in IT he would know this is basically just plain stupid.

He is willing to compete with 4 machines vs multiple huge mining companies... :')?!

If he want to start mining, he should mine other stuff.

Probably more money in mining the ****coins and then dumping when they are of a reasonable value/return

It doesn't matter how many machines you have, the ROI is the same.

no way, scaling increases profitability in everything. lower maintenance per machine, lower power cost per machine, higher overall efficiency, more access to leverage, etc

I agree, scaling can increase profitability. However in many cases it does the opposite. I owned a lawn service and scaling definitely did not make it more profitable. That's why a lot of companies like to "stay small". There's a reason you don't just see a few lawn companies mowing the whole country.

What they may lose in lower power and lower maintenance?(dunno if this is even true), they may gain in the fact they don't need to rent a building and hire people to sleep by the machines.

i see your point, but i think comparing it to a business where you exchange time for money is unfair. i would compare it to real estate doors - which obviously scale very well. simple example: 4units at market price here = money pit. 8+ units at market price = not worth it, 15+ units market price = actually able to make it profitable

leverage plays a big role which you can't really do much of with crypto mining, the way i compare it aint totally fair either. one thing i will say is id never touch your friend's business but i don't know crypto, invest in what you know

Including the cost of electricity?

No, and the machine probably won't even last long enough to pay for itself.

actually this is not true. unless you are part of a pool it requires a large investment to even compete with the other miners. News flash these pools aren't looking to give your friend with his 4 machines the same rate/benefits as their miners who are investing 100-1000x as much as him (also suppliers give better prices to those who buy in bulk). The minimum capital investment for just the equipment to be considered serious was 100kish but this was 2-3 years ago and one of the reasons why I didn't pursue it was that it was becoming more and more competitive so it would probably require more investments to be relevant in the future/now. This combined with the exponential increase in computing power of new technology made it a no brainer to avoid. I think the breakeven point assuming you don't find a pristine location with amazingly low fixed costs is around 30-50kish not including factors like increasing price, difficulty, new technology etc