I wanted to better track the profitability of my mining and bitcoin investment operations, so I started to think a bit about how best to do that. I decided that I needed to clearly separate the mining business from speculation in the appreciation of bitcoins. The approach I took was to calculate the revenue to the mining operation as if I sold every bitcoin generated as it was generated (I did it on a daily basis). So, if my miners generate 1 bitcoin on a particular day and the closing price that day was $5, I would book $5 of revenue for the mining operation. That revenue comes from the bitcoin investment operation buying bitcoins from the mining operation at the market price each day (after all, if I weren't generating bitcoins, the investment operation could have bought them on the open market for that price).
Separating things like this has been quite illuminating...if I include the estimated resale value of my hardware in the assets of the mining operation, I'm right around a 21% return (over ~3 mon). If I don't include the resale value, I'm still not yet profitable. The investment operation however has returned about 413% over that same period of time! But, it gets better...
I then took a look at what kind of return I would have had if I'd invested all of the money I put into mining equipment in bitcoins. The dollar cost average of bitcoins that I've purchased (including those purchased from my mining operation) over the past 3 months is $2.11. Using that price (which is more realistic than if I'd picked the price when I started in Feb (which was less than $1)), if I'd forgone mining and just invested all of that capital into bitcoins directly, my return would be identical in percentage terms, but I would have a 3.3x greater absolute profit.
I feel like this is a good way to analyze a mining operation vs price speculation. If you hold the bitcoins you generate, then any gains you realize from that point forward have nothing to do with mining (because as I mentioned above, you could have simply bought those coins on the open market). There is less risk in mining (due to hardware resale), but to date, far smaller returns. I wonder if most people aren't doing this kind of analysis and are conflating their returns from mining with their returns from price speculation (which may lead to sub-optimal poor decisions regarding mining vs buying).