Buying Hardware vs Mining?

[auto2nr1]

Looking at the current difficulty and how it will continue to rise at a rapid rate in the future what do you think is the best option as of today? Is it better to invest in the mining companies such as ASICMINER, AMC, 100TH, etc... Or is it better to buy hardware such as the Avalon clones, Bitfury, KNC, Terrahash, etc... Let me know what your opinions are in regards to this topic. Thanks.

[Franktank]

Depends on what you want from the investment. Hardware is a fixed rate, depreciating over time but you get your BTC much sooner (put back into more hardware quicker). But with difficulty, can you match and stay with the rising tide? AM shares (or AMC & 100 TH/s) means you trust the issuer to do what is right and pay out the "correct" number of BTC. The risk there is you can't control what happens to those companies but you get convenience in return.


What do you want?

[Entropy-uc]

The first step is to compare the share price to the hardware cost.  For the typical mining bond that will be the end of your calculations because the bonds are always outrageously overpriced.  I would research what happened to investors in mining bonds if you still think it's a good idea.  Eskimo bob has a good thread on it from last year. (Although technically he's wrong - they aren't mining turds, they are scat bonds.  :-) )

Asicminer is a different beast.  With both a virtual monopoly on ASICs that you can buy and receive in a timely manner and an enormous network share that their business plan calls for maintaining, it is hard to determine a present value for the company.

Over time you would expect them to lose their hardware monopoly and that will erode the dividend stream somewhat.  But they are unlikely to lose top spot on the network for a very long time.

At 1.5% weekly dividends, I am not a seller.  Overall, I think the shares are presently underpriced because many of the wise early investors are cashing out the princely gains they have made at this level.  If this dividend level outlives the profit takers, I would expect the equilibrium share price to head into the 3 Bitcoin range during the summer months.

AMC screams scam to me.  He has no skills to deliver what he claims, has set up a corporate structure with 2 different layers of scam in it, and publishes lies on a routine basis.  That doesn't mean you can't make a profit selling shares to a greater fool.  :-)

[Franktank]

Regardless of what you think, AMC is still considered a "competitor" of ASICMiner, 100 TH/s, & BTC-Garden. Mr. Slaughter has put time and money into his brand and come up with a plan that convinced other investors to join him. Quite a lot is riding on how quickly he can turn those 20k chips into actual hashing power. However, only time will tell if he is an effective competitor of the already established ASICMiner.

[Franktank]

you are really desperate to get some mileage out of Friedcat mentioning AMC in a laundry list aren't you?

Why don't you address something of substance.  Here are a few things that guarantee AMC shareholders get ripped off:

1.  20M 'reinvestment' shares that Ken votes just like Ian Bakewell did before he ran with the money.
2.  VMC owns the IP developed with AMC money and pays only a pittance to the funders
3.  VMC expenses are being paid out of AMC revenue
4.  Ken takes 40M shares of AMC for no contribution of capital

Correct me if I'm wrong but I don't think friedcat has ever mentioned AMC. Not an AMC shareholder so those issues that you brought up aren't really my concern (and should be those that hold shares). I have no allegiance to AMC.

[Franktank]

So you are willing to support the idea of investing in AMC as long as facts don't get involved?

Are you Jim Cramer?  Or just a mere columnist for the Motley Fool?

If you don't like or agree with what I'm saying, you could just, you know, ignore me.

auto2nr1 - Apologies about cluttering up your thread, hopefully my first post helped a little.

[jmutch]

It's a tough one that i'm trying to nut out as well at the moment.

I think if you can find hardware for around 2-3BTC per GHs/s right now in your hand, that would be a better medium-long term investment.

however a better short term investment would be shares because of liquidity/dividends. however shares come with added risk in my opinion.

this is just my opinion it could be very very wrong...

[auto2nr1]

Thanks for the replies everyone. I am just stuck in a fork in the road. Debating whether i should buy all hardware and hope that difficulty doesn't spike too high in 3 months and the ROI does not take too long. On the other hand i am bullish on BTC and am in it for the long run. I think putting money into ASICMINER shares as well as 100TH and BTC Garden might be a better option in the long run. I am also invested in AMC but not too much due to all this talk about it being a scam and what not. We will have to wait and see on that.