It is all relative to btc price. If you start your investment with $$, then you would not mind 20% diff increase as long as the price increased 30-300% in the same time period, right?
What we have, on the other hand, is stable (last 7 mo) or declining (last 20 mo) btc price, while difficulty is still rising.
We have a distorted market because market participants don't have equal free excess to mining equpment as many manufactureres don't even make such equipment available at any price.
In other words, the stakes are against home miners, this is clear.
What we have, on the other hand, is stable (last 7 mo) or declining (last 20 mo) btc price, while difficulty is still rising.
We have a distorted market because market participants don't have equal free excess to mining equpment as many manufactureres don't even make such equipment available at any price.
In other words, the stakes are against home miners, this is clear.
Not necessarily.
If you buy a miner for 2 bitcoins when bitcoin is at $200 your total cost is $400. The difficulty increases until it is no longer profitable to mine. You end up mining 1.5 bitcoin but the price is now $400. You say, hey I now have $600 when I started with $400, so I made money. But if you look at the return of bitcoins, you just lost money because you started with 2 and now have 1.5.
On the flip side, if price is stagnant or decreasing slightly, and as a result difficulty remains stagnant or even decreases some, that miner may run profitably for a long while, and you may end up with 4 bitcoins at $150 by the time the miner isn't profitable. In this case you've essentially purchased 4 bitcoins for $100 each and you started with $400 and ended with $600. But if you had bought 2 bitcoins instead you'd have spent $400 and ended with $300.
Obviously there's other variables at play, but mining could be a way to protect against a drop in price at the expense of some upside if the price increases.
You offer another positive way of looking at this. Thanks for your input.
