Bitcoin Forum

This is just something I wrote, because there are a lot of these threads. I hope it clears things up.

So, is cex.io a good investment?

I'm writing this post for those of you that are considering investing in the mining operation at cex.io. Many of you will probably be quite new to the cryptocurrency world, so I will try to be as clear as possible. First, I would clear this up; yes, I do use cex.io myself. However, I'm writing this because I know something about it and have experience with it, not because I'm advertising it. Neither I want to bash the service, I only aim to give a realistic view to anyone who is interested.

Cex.io is an attractive option for a lot of people who are interested in mining, mainly for two reasons: it is easy to use and you can start mining with any amount of money. You don't have to buy and maintain expensive pieces of machinery. Obviously, this comes at a price.

The first thing a potential investor has to realize is that cex.io is not a viable long term investment. You are guaranteed to lose money if you just buy mining power and leave it mining for a long period of time. You will never get your investment back from mining profit alone! The main source of income for cex.io users is trading mining power - buy low, sell higher. Almost like you would do trading with any cryptocoin, just that it's quite different to coins. For many coins, at least a lot of people are expecting them to rise in value as time passes. This is quite a realistic prospect for many coins, like Bitcoin. But at cex.io you are buying and selling mining power. This is totally different! The real value of hashing power is decreasing all the time and at a very fast rate. This is because the hashing power of the Bitcoin network is increasing all the time, at least for a long time from now. While the network becomes more powerful, your share of the reward, proportional to your mining power, will be smaller.

Take a look at the following spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0AiFMBvXvL2dtdEZkR2J4eU5rS3B4ei1iUmJxSWNlQ0E#gid=0
You can see how fast the difficulty has been rising and it shows now signs of slowing down. You can see that, for example at the time of writing this the network's hash rate has more than doubled in less than two months. This means, if you bought mining power two months ago, it will now generate only half as much Bitcoins as it did at the time it was bought, so it is basically worth only about half of that what is was two months ago. So, mining power will decrease in value very fast! From the spreadsheet you can see that the network's hashing rate has risen from 1.5 % to 4 % daily for the past months.
Let us assume a 2 % rise in hashing power per day. If you buy 1 Bitcoin's worth of hashing power today, you will get 20 Gh/s. At 2 % rise of hashing power per day, the reasonable value for your investment will have dropped by almost two percent also (not quite, but almost). But 20 Gh/s at the time of writing will make you approximately 0.0085 Bitcoins, less than 1 % of your investment. This is just to make clear that holding will not make your money back.

So, in short, unless you are able to buy mining power at a very good price, you can only profit from your investment by selling the mining power. Unless you are doing a one-off investment, you must have a clue how to sell and buy at the right times. So, you will have to speculate on the value of Gh/s and trade accordingly. This kind of trading is highly risky and the markets are far from being completely predictable.

So to be completely honest, if you thought cex.io is a good place to mine because you don't are not familiar with Bitcoin mining, then it is probably not for you, unless you just want to try it and are prepared for a loss. To be successfull, you have to be familiar with the market and know what will affect it. Difficulty changing, which happens approximately every ten days, is a usual point of speculation and the easiest one. There are loads of things that will affect the price, an easy example would be Bitcoin mining hardware shipments. I am not going to come up with a list, there are many things and you will have to familiarize yourself with all the factors. Even then, there are a lot of total unknowns. One thing a potential investor should consider is how does adding new mining power happen. I do not have the answer for this, but obviously cex.io can put more mining power onto its own market; to my knowledge they have not made any announcements regarding that, while surely that will push the price down and is information that should be available for the customers beforehand.

These warnings aside, it is of course possible to earn money trading on cex.io, but not everyone will make a profit. You should familiarize yourself with the market if you are seriously thinking of making money.

Excellent post, I agree with you.
Now the GH/s costs 0.048BTC so it's a good time to get into cex.io because after the holidays the price will go up again
and you have a chance for fast profit.
Also the site is now trading LTC, I think in the future that they will incorporate more cryptocurrencies and maybe scrypt
ASICs and it will be not just a mining platform but also a trading platform.

I am making some decent BTC and GHs off of cex.

I don't know if it is best for an absolute noob. but anywhere you trade you generally lose a little to begin with.

The most important thing is that it teaches you how to trade in a bear market and still make money.

It's simple for me, I buy GHs on a dip, wait for a bit, put a sell back in at around the same price that I bought, then once that gets filled pick a dip to buy back in on.

It turns out I mine about half the time and with no trading fees the risk is low unless you have a huge dip that never gets close to your buy-in point, so then you would just mine and wait for a reset of the difficulty (like LTC has seen lately)

If you show yourself to be intelligent, you might even get picked up by the trading group, and make some money by cooperation.

It would be great if they add the option to choose between a few coins to mine, especially scrypt coins. But I guess it would be too much effort and extra maintenance for them to do that.

Ideally I would like to be able to set up mining any coin of my choice. Mine a promising coin for a while and then sell the coins and mining capacity later for a nice profit. Wishful thinking!

I have two comments:

1. Mining at cex.io does not have to be unprofitable. It is currently unprofitable only because the price is too high. It would have to drop below 0.025 BTC to be worthwhile. If the price dropped low enough, I would not hesitate to jump in and buy.

2. Most cex.io traders lose money because the price is falling rapidly. It has fallen about 80% in the last 3 months. You have to be very lucky to make money from trading in this environment.

Bah, it's not hard to make money in a bear market, you just have to look at it a different way. if you are getting paid while stuck in GH, and trade even you win. Simple as that.

For instance, right now I am out of GH and into BTC, waiting for the drop, then I get in again.

@Kuverty Sure people need to be familiarized with the cryptocurrency market however not everyone will make a profit for sure.

Very interesting!  Thanks for the info!  I looked into them since I don't have any decent mining hardware, just a 6970, but with difficulty where it is it's like using a toothpick to dig a gold mine.  But I would have just bought it to mine and it didn't look profitable to me, now I know why.

I'm fairly new to bitcoin, I looked into it 3 years ago, but before I got started mining my cluster headaches came back with a vengeance (cluster headaches.com if you are interested, but basically take a day long migraine and pack it into 1/2 hour to 2 hours and repeat up to 10 times a day) and it was impossible for me to think or figure anything out.  Now the headaches have slowed down and I'm trying to get back into it but I'm afraid I really missed my opportunity.  I have done some stock trading in the past so I understand the concepts involved.  Will have to look into it, thanks again for explaining it.

I had mostly been looking at getting a newer bitcoin miner.  There are some coming out soon at 1.2 THs to I've seen up to  3 THs.  But the kicker is you have to pre-order and they won't be delivered until March or April.  The question is will you be able to get your money back on those?  At $6k-$10K US, and with delayed shipping and difficulty rising it seems really risky.  When those start coming on-line it could really start to raise the overall difficulty if I understand it correctly.  Add that to the fact that I don't have the cash to lay out now to get a shipment in 2+ months and it makes me nervous.  What happens if they don't ever ship to me.  If I pay up front with bitcoin I'm screwed.  I have no recourse to get my money back.  If I could buy it with my American Express card I would be less concerned since they would cover me if I got screwed.  I don't know if there is an escrow service out there I could use or if they would accept it if I asked.  I really need some way I can make some money from home without a normal job because of the damned headaches I get.  It seems every time I start to get ahead they come back and I'm a basket case for several months to several years.  If I could have a machine mining even when I'm incapacitated due to the pain at least I'd be able to pay the bills and have a life when I'm in remission.  The problem is anyone that promises you something like that is usually a scammer, but I thought bitcoin might fit the bill, at least for a few years until difficulty gets so high you need a multi-million dollar supercomputer to mine effectively.  If the damned headaches hadn't kicked up when they did, I could have been mining 3 years ago and possibly have enough profits to live on for quite some time by now, but that's my life...

Let me know what you think.  I'm open to any suggestions or ideas that might help me figure a way to make a living.  I've even thought of setting up a online store selling something and accepting bitcoin, but I don't know what to sell, and if the headaches kick up again, fulfillment could be a problem unless I have a drop shipping system where I didn't have to do the fulfillment.

Thanks for any ideas!

Korxax

___________________________________________________________________
Bitcon -- cash for the 21st century!

I hate to beg... but...
Looking for donations for a poor disabled guy to get a mining rig.  Long sad story that boils down to Cluster headaches- think a day long migraine packed into a half hour to 2 hours and repeat up to 10 times a day.  And my insurance company screwed me over to the tune of $50k when I had a plumbing problem flood my house, destroyed tons of my stuff including several computers.  Total loss, about $50k  Beware the red umbrella.  Any little bit of help is greatly appreciated.  I have fairly low power rates... so if you have an old miner that you want to donate I would be very grateful.  Contact me and I'll get you an address.
1NtV1q29FtRAYAkMJHMYbASZLiLur2FQe

hi there,

i bought 19.6 gh for 1 btc on cex.io 2 days ago. including what was mined in roughly 48 hours (0.012 btc) my cex.io position is now worth 0.9 btc, so i lost 0.1 btc due to the price drop of gh in the last days.

with new much faster mining technology flooding the market all the time the gh price will continue to go down i'd say. even if you reinvest all your mining earnings in gh you probably will not make a profit, unless gh price goes up or stays stable while you mine.

the cex.io price graph only goes back 30 days unfortunately, so i don't know how the gh price developed over the last months. maybe it actually went up at some point due to shortages in hardware delivery?

but hey, if you want to try it out anyway sign up via https://cex.io/r/0/meinhard/0/ and help me to cut my losses with some referral income. :)

They only show the last 30 days because they don't want people to see how much the price has dropped.

I think it is something that can be profitable but something you have to be patient and smart with. I don't think that it is really something that someone new to the game could really make happen but you never know. You just have to watch it and teach yourself how to play the game.

CEX has been on a tear lately, just going up and up... Wish I had kept my GHs instead of selling low.

I referred someone to Cex.io and they ended up buying a gigahash, then they forwarded me a link to this thread... To me, it sounds like you need to have some knowledge of the market before even thinking about making any $$$. Unfortunately, I was naive enough to believe I could just have gigahashes in my account, and let them sit there earning a tiny profit.

The Cex price for GHash/s has to go down with time as difficulty increases. I would wait for difficulty stop increasing first before considering buying Cex

Daytrading is the keyword.
Wait for the crash, buy in, wait for the price go up again and sell. Indeed there is not much mining profit then, but it´s your only chance to increase your btc with cex.io.
But don´t be to greedy. After the crash the price will go up again, but most times it doesn´t reach the price before the crash.

Agree. Don't get greedy, I would sell now, wait for that plunge.

So it sounds like day trading stocks.  You are pretty much glued to your computer screen waiting for buy/sell opportunities?  But with the added benefit that you are mining during the time you are holding.  Too bad you can't do it in your IRA. lol.


Korxax


1NtV1q29FtRAYAkMJHMYbASZLiLur2FQe

For good investment, buy ghs in cex.io or buy mining hardware and connect to btc guild?

Neither.
For profitability, build a GPU rig to mine scrpyt-based coins and sell them for bitcoin.

what "mine scrpyt-based coins" can you give more info?

Coins like bitcoin and namecoin are sha256-based.
Coins like litecoin and dogecoin are scrypt-based (sorry for my typo in the previous post).

Unlike sha256, scrypt hashing is memory-intensive, and thus it is much harder to build scrypt ASIC.
We may have some scrypt ASIC later this year, but until then almost all of the hashrate are from GPUs.
Thus, you could still get decent revenue mining scrypt altcoins with your GPUs.

For newbies or else
cex.io or alike are not a good investment.

thanks for info


what your idea to earn bitcoin ?

You are welcome :)
Have fun mining :)

it is not an investment, it like throwing away your money

That's true, that's why you don't put in more than you can afford. You will probably get more out of investing $20 with Cex.io than wasting it on Facebook game credits, drugs, and the like. It's a similar thing to Leancy (http://leancy.robertattfield.com) as well, except you're making more with them than Cex.io.

Wait why ? Is it not better for ur btc (when u not using it) to sit on cex and earn u some small profit, then when u need it u can cashout. Then to sit in ur wallet doing nothing?

I agree that profit is nothing over what u need to invest, u can't get 100% return in forever :) . But when u invest some (that u can afford to lose) and do some trading, when waiting for price change, mining and if u add to that few good refs, u can make some nice profit.

Exactly. I'm gambling there with 2BTC and made 0.2 in a week. Trading is much more fun than waiting for mining. :)

I agree, for cex.io not suitable for mining. but suitable for trading ghs

I actually invested 0.05ish btc for 5 gsh on pbmining . Its making me 80k per day so money return in 60ish days and u have that ghs for 5 years :D

as a Newbie i invested in CEX and made .01 btc

Go for cex.io if you dont ever want to see your bitcoin again.

No it is not for a newbies. Only way you can earn there is if you buy cheap and sell for more. Other than that I don't see a way to make it profitable.

What's even worse than the more-than-unsure ROI on cex.io is the shady practices - especially from "support staff".

As soon as you start teaching (and I mean teaching, not trolling) newbies about how to find out true market price of traded GH/s (actually by pointing them to the CEX.io own pages like their calculator and maintenance fee site), you may get banned.

Actually you WILL get banned, because cex.io has set up a set of "rules" (https://support.cex.io/hc/en-us/articles/201624686-Chatbox-rules) for chat that end with the famous


Joker rule. So No rules. Support staff is allmighty and will kick your ass as soon as you should try to prevent Newbies from loosing money there.


It won't help, but I strongly suggest Newbies to stay away from that shady business.


Rico

Unfortunately
and only newcomers will fall for this honeypot.

No, difficulty will keep rising and hashrate price will keep dropping.