What is ROI ?

[ammo88]

Yeah, like the topic says: What is ROI ?

I've seen this while reading about different mining hardware and other stuff regarding BTC mining.
Yet I've not found an answer.

TY in advance.
and for the haters, FU in advance!

[Aahzman]

Return On Investment, basically, a prediction of how long you'll have to mine to recoup the money spent on mining equipment and operating costs.

[Aahzman]

in financial terms, it's the rate at which your investment becomes profitized. pyramining, for example, advertised a 10% ROI with zero referrals. so for a 1BTC investment, I would get back 1.1BTC after a certain length of time.

[Aahzman]

but back to hardware. So, you buy a couple of Radeon 5850's at $75 each, you buy a 1200W power supply for $150. You get some extra cooling hardware, say another $100. So your investment is $400 in hardware. We'll assume that your electricity is included in your rent. How long will it take you to earn $400 worth of bitcoins based on your chosen mining pattern? are you mining 24/7? 100hrs a week? let's say you are on a mining pool, you're generating say...i dunno..800Mhash. so you're earning around 0.4BTC per a day if you mine 24/7. (conservative). Let's say 0.5BTC a day. that's about $6/day.  at that rate, it'll take you...67 days to recoup your $400 investment. Of course, many things can affect your mining performance, so let's be a little conservative and say 75 days. 2 and a half months. If you have to pay for power, then you have to factor those ongoing costs. Internet costs, etc.

[freeAgent]

Investopedia is a great resource for this sort of stuff: http://www.investopedia.com/terms/r/returnoninvestment.asp

[ammo88]

Wow thx everyone for answering, now I get it.. !

freeAgent thx for the link!

[jojo69]

ROI is a key concept to wrap your head around, not just for bitcoin but for your whole life.

One big challenge humanity is up against is energy ROI, it is taking a larger and larger fraction of a barrel of oil to deliver a barrel of oil to market.  Another similar challenge is the decline in the marginal utility of debt in a ZIRP environment, lower interest rates are failing to spur growth.