Mining equipment return has gone negative for bitcoin investment

[johnyj]

Based on latest difficulty and a 20% difficulty change projection, all the ASIC mining rigs will generate 500% of its current difficulty income during its lifespan

This means, if you have a 25Gh device, and start to hash at the beginning of this difficulty, you will make 4 coins total at current difficulty, and 20 coins during its lifespan, so any purchase price higher than 20 coins will never ROI in bitcoin. If the device arrived after one month, it will only generate 10 coins during its lifespan

Take knc's 200GH device for example, costs about 40 bitcoins. If it start to mine after one month, first period will be 16 coins, 80 coins during its life span. After another month (which is shceduled delivery time), first period will be 8 coins, 40 coins during its life span.

This proved again, anyone who use bitcoin to purchase mining equipment will seldom ROI

The positive thing is, now the mining channel of investment in bitcoin basically fully closed, more capital will flow back into exchanges

[DigitalHermit]

The positive thing is, now the mining channel of investment in bitcoin basically fully closed, more capital will flow back into exchanges

I think you underestimate the number of fools out there who don't know basic math and are consequently ready to throw their money away on the nearly guaranteed loss of a mining rig preorder purchase.

Just check out the KNC, Cointerra and HashFast threads if you need any more confirmation of the unthinking hysteria.

[polarhei]

Well, there are many things to follow up. The investment is currently the most complex thing I have heard. If you do something with General equipment, then It should be in negative but not that as there are many options. Since Kncminer can perform BTC/NMC merged mining, even the difficulty for BTC raises to 125M, You still be able to exchange NMC to BTC if people trust NMC After you have paid off your cost.

[BombaUcigasa]

The problem with estimates is that people only choose parts of the equation to estimate and not the rest of the factors.

I would propose that spending X amount of real resources now to purchase (what you call) a negative investment rig will still return Y > X real resources later in time.

For example I would pay 4000 USD (40 BTC) for the 200GH device, which would net me 80 BTC in the future, say 2 years when the income is that of 1% day one. I would be able to sell those 80 BTC for an arbitrary sum of USD, varying from 8000 USD to 800 000 USD (two 10x price increases as seen in the past 4 years), or even more should I catch the apex of another bubble, say 8 000 000 USD.

You might say that holding the BTC will give better and easier benefits, but we can't ALL do that at once, can we?

[Akka]

Even at this point I think the mining Bubble will continue for a while and many people will loose a lot of money.

Just look at this forum. Bitcoin is currently all about mining. If I click on unread posts 90% are somehow related to mining. 

I hope when this craze finally ends we will see more actual stuff about getting Bitcoin adopted again.

[reactor]

Even at this point I think the mining Bubble will continue for a while and many people will loose a lot of money.

Just look at this forum. Bitcoin is currently all about mining. If I click on unread posts 90% are somehow related to mining.  

I hope when this craze finally ends we will see more actual stuff about getting Bitcoin adopted again.

The problem here is that all the excitement from the Bitcoin conference wore off and no real businesses have sprung up, no retail adoption of Bitcoin as a payment method has happened, etc.  There are a number of "onboarding" businesess which are based around little else than what blockchain provides today, BitInstant got venture funding then went dark shortly thereafter other than status updates, Coinbase is still rocking it (good on 'em!), but there is really nothing else.  All the other businesses are around mining which everyone can admit is a losing proposition unless you can guarantee delivery before the other guys bomb the network.  

But wait, Silk Road has spawned a number of competitors that will even deal with good SR won't touch, so the black market around BTC and even LTC is expanding.  And as more talk of banks and countries financial system failing goes around there is a bigger chance of folks temporarily moving money to BTC as an intermediary, but that will only produce a momentary bubble that some investors will cash in on, otherwise it'll prove BTC to only be a transfer medium between outlets of the fiat world.  May as well be Liberty Reserve at that point. Oh wait...

This industry needs an "Aha!" moment, a spot it can fill that nobody else can touch otherwise.  Unfortunately moving cash into a security with fluctuating value and shady/inconsistent methods for moving funds back and forth to actual money is still not a big selling point, and unless I want drugs, stolen computer equipment, or to deal with the few online businesses that have begun swapping BTC for their digital services, I'm out of luck.

I can buy groceries with $20 in my pocket, if I had ~$20 worth of Bitcoin it may be worth $15 when I get to the store and only buy me $13 of groceries because of exchange.  Bitcoin fails in the real world test.

[Akka]

I disagree. In the 2011 Bubble it was all the same. A lot of people joined to get rich quick.

After it has worn of, a lot of people left. But all the "big names" we now have in Bitcoin  are people that joined in 2011 stayed and started to build stuff.

This time 100th the times of people joined, and if the same % stay and work on making Bitcoin more useful we will see the fruits of it in 1 - 2 Years. But the hype has to end for this, including the mining hype, so people start looking for other means to get BTC.

[reactor]

I disagree. In the 2011 Bubble it was all the same. A lot of people joined to get rich quick.

After it has worn of, a lot of people left. But all the "big names" we now have in Bitcoin  are people that joined in 2011 stayed and started to build stuff.

This time 100th the times of people joined, and if the same % stay and work on making Bitcoin more useful we will see the fruits of it in 1 - 2 Years. But the hype has to end for this, including the mining hype, so people start looking for other means to get BTC.

And what did the community get?  Mining is exploding to the point it is about to collapse on itself, payment processors going on and offline with uncertainty around most of them, investments which are mainly based around mining hardware pools or investing in other investments (which are generally mining pools).  Other than proving that greater influence of outside interest (read: $$$) can change a market and that BTC is basically only still existing to self-perpetuate, not sure what "the next step" can be for v1 of online currency when there is no great demand for it.

Oh, and "pre-orders".  And missing chip deliveries.  And knock-off hardware.  And scams on eBay/Amazon/anywhere you can sell stuff.  And ponzi investment schemes.

[Akka]

I disagree. In the 2011 Bubble it was all the same. A lot of people joined to get rich quick.

After it has worn of, a lot of people left. But all the "big names" we now have in Bitcoin  are people that joined in 2011 stayed and started to build stuff.

This time 100th the times of people joined, and if the same % stay and work on making Bitcoin more useful we will see the fruits of it in 1 - 2 Years. But the hype has to end for this, including the mining hype, so people start looking for other means to get BTC.

And what did the community get?  Mining is exploding to the point it is about to collapse on itself, payment processors going on and offline with uncertainty around most of them, investments which are mainly based around mining hardware pools or investing in other investments (which are generally mining pools).  Other than proving that greater influence of outside interest (read: $$$) can change a market and that BTC is basically only still existing to self-perpetuate, not sure what "the next step" can be for v1 of online currency when there is no great demand for it.

Oh, and "pre-orders".  And missing chip deliveries.  And knock-off hardware.  And scams on eBay/Amazon/anywhere you can sell stuff.  And ponzi investment schemes.

Exactly:

Even at this point I think the mining Bubble will continue for a while and many people will loose a lot of money.

Just look at this forum. Bitcoin is currently all about mining. If I click on unread posts 90% are somehow related to mining. 

I hope when this craze finally ends we will see more actual stuff about getting Bitcoin adopted again.