Even at cex.io, with my current rate of return after their almost 50% fees, I’m still picking up about 6%/month. If I can sell my computing power on their market for the same price I bought it after a month, that’s a good return.
Thats the problem: you cannot sell your computing power in the market at the same price you bought it at, because the value of the miners is rapidly decreasing (as more and better miners are released onto the market, and the hash rate increases, causing your equipment to mine less bitcoins per unit of time).
So what actually happens right now when you buy mining equipment is that you spend that $3000, and the first month you get 6% back, and the next month you get 5.5% back, and the next month you get 5% back, and so on. At some point the electricity cost to run that miner becomes greater than the value of the bitcoins it produces, at which point you must shut it off or lose money. If the amount of bitcoins you generated during that time was equal to or greater than the amount of bitcoins you could have purchased for the cost of the miner, then you did well.
However, at present this is not the case. If you calculate out the expected returns for the current generation of available mining equipment, is has just gotten worse and worse over the past several months, as the mining difficulty has continued to increase rapidly and the bitcoin price has greatly declined.
It has gotten so bad at the present time, that even if you assume that the difficulty will not increase AT ALL anymore, it would still take you 6-12 months to recover the cost of the ASIC. (This is a very unrealistic assumption. The difficulty has not actually had a period where it declined in about two years. While we may see a few periods where the difficulty stayed at current levels, expecting this to occur for 6+ months is highly unrealistic).
The present time is looking a lot like late 2011/early 2012 in terms of the viability of investing in mining equipment. This is a signal of a bottom in the bitcoin market, imo, but at market bottoms the correct plan is to buy bitcoins, not miners. The correct time to buy miners is after the bitcoin price has increased very rapidly, but the hash rate has not yet had time to catch up.
Right now, because the bitcoin difficulty has increased by a factor of ~30 over the past 10 months, and the bitcoin price has decreased 65%, the result is that any miner you buy right now will result in a loss.
Thats the problem: you cannot sell your computing power in the market at the same price you bought it at, because the value of the miners is rapidly decreasing (as more and better miners are released onto the market, and the hash rate increases, causing your equipment to mine less bitcoins per unit of time).
So what actually happens right now when you buy mining equipment is that you spend that $3000, and the first month you get 6% back, and the next month you get 5.5% back, and the next month you get 5% back, and so on. At some point the electricity cost to run that miner becomes greater than the value of the bitcoins it produces, at which point you must shut it off or lose money. If the amount of bitcoins you generated during that time was equal to or greater than the amount of bitcoins you could have purchased for the cost of the miner, then you did well.
However, at present this is not the case. If you calculate out the expected returns for the current generation of available mining equipment, is has just gotten worse and worse over the past several months, as the mining difficulty has continued to increase rapidly and the bitcoin price has greatly declined.
It has gotten so bad at the present time, that even if you assume that the difficulty will not increase AT ALL anymore, it would still take you 6-12 months to recover the cost of the ASIC. (This is a very unrealistic assumption. The difficulty has not actually had a period where it declined in about two years. While we may see a few periods where the difficulty stayed at current levels, expecting this to occur for 6+ months is highly unrealistic).
The present time is looking a lot like late 2011/early 2012 in terms of the viability of investing in mining equipment. This is a signal of a bottom in the bitcoin market, imo, but at market bottoms the correct plan is to buy bitcoins, not miners. The correct time to buy miners is after the bitcoin price has increased very rapidly, but the hash rate has not yet had time to catch up. Right now, because the bitcoin difficulty has increased by a factor of ~30 over the past 10 months, and the bitcoin price has decreased 65%, the result is that any miner you buy right now will result in a loss.