Spiral_mind = you are right on the Bitcoins. It most likely is a lot smarter to just buy the bitcoins flat out. I personally am betting on a $300+ bitcoin on the low side and $10,000 on the high side and would rather have hardware mining than bitcoins sitting in a wallet. Even it it takes me a year or two to recover my investment. This is a long term 10 year investment for me. Either bitcoin is going to make a lot of money or its going to be worth nothing. There really isn't a middle ground with it.
I am trying to diversify by also doing Litecoin and other scrypt currencies (though not holding my breath on the current batch of alt/scam coins).
Then you have the whole tax thing. Its a lot easier to write off hardware and explain to the IRS what you are doing when you have hardware to show for it than to explain to the IRS a million dollars in Bitcoins. I am not a tax expert and use tax attorneys for all my advice so I might be wrong on this and if so would love to hear so. The advice I am given though is its lower taxes to buy the equipment than to buy bitcoins which could be considered speculative and a much higher tax rate.
Well from what I understand if you hold onto the coins for a year before selling then you only pay capital gains tax (15%). If you sell them within a year of getting them then you pay normal income tax.
If you buy them soon, you will potentially be able to turn a large profit in the next bubble and only pay capital gains. With buying mining equipment you will have to wait to get the coins over a long time(potentially never break even at current ASIC prices), and then wait to sell them as well. I would also agree that holding coins for a very long time could be risky. You'll actually have to hold onto the coins for longer though (if you care about taxes and selling at a high point) with a miner than with just buying the coins and selling when they next bubble (probably next year).
I'm not familiar with any way to write off mining equipment on taxes, care to fill me in on that?
That really leaves you with pretty limited market options for your coins. You'd have a lot more flexibility in your profit strategy if you buy them instead of mine them IMO.
