It is all relative to btc price. If you start your investment with $$, then you would not mind 20% diff increase as long as the price increased 30-300% in the same time period, right?
What we have, on the other hand, is stable (last 7 mo) or declining (last 20 mo) btc price, while difficulty is still rising.
We have a distorted market because market participants don't have equal free excess to mining equpment as many manufactureres don't even make such equipment available at any price.
In other words, the stakes are against home miners, this is clear.
Not necessarily.
If you buy a miner for 2 bitcoins when bitcoin is at $200 your total cost is $400. The difficulty increases until it is no longer profitable to mine. You end up mining 1.5 bitcoin but the price is now $400. You say, hey I now have $600 when I started with $400, so I made money. But if you look at the return of bitcoins, you just lost money because you started with 2 and now have 1.5.
I always start with $$, for example I use Coinbase instant purchase to buy bitcoin, then immediately buy miner.
In such case I think of that purchase as if it was made in $$, although technically I used bitcoin as an intermediary between $$ and purchasing of the miner.
I agree that it does not work this way, for example, if you used previously mined bitcoin (say, those 2 bitcoins in your example), unless you re-filled your bitcoin stash using cash as soon as you spent it on miner, as previous poster said.
You can say: why don't you simply buy bitcoin and then make profit when it rises?
the advantage of mining is that you are basically purchasing bitcoin slowly, therefore averaging out all ups and downs.
