I've been researching mining, and it seems far easier and cheaper (albeit less fun) to just purchase hashing power from a provider like genesis-mining.com.
You can buy 200 TH/s for life for about $75,000, and with this power you'd make an estimated $180,000 in a year (before fees).
I know turning that kind of profit can't be that easy
So what's the catch with this?
Thanks!
Difficulty. That's the catch. Your 200 Th/s might be good for today, but as more people begin mining and Bitcoin miners become more powerful, the difficulty in solving blocks will go up. That means your 200 TH/s will not produce the same amount of Bitcoin as it did when you paid for it. Diminishing returns over time is the fate every Bitcoin miner faces.
You calculated 180k per year, but that assumes the difficulty stays the same as it is today. That will not happen. In general the difficulty will only go up. There may be times when it drops briefly but those periods are never sustained for very long. Difficulty adjustments BTW occur every 2 weeks.
Here is a chart that shows difficulty increase over the last 9 months. As you can see, the difficulty is almost double what it was a year ago.
So the difference between buying hash power and buying physical miners, is that you will be able to resell your physical miners when the difficulty goes up. Buying hash power is fine but your betting on that level of hash power staying relevant forever (which it won't). If you have a physical miner, you can sell it and recoup some of the costs. That can then be put into buying a new more powerful miner. You don't have that option when you only buy hash power. Your only option is to buy more hash straight out of pocket. Reselling a physical miner essentially gives you a discount when you buy a new and improved one. But then again you also don't have to worry about things like electricity or finding a place to run your miners when you only buy hash power.