CEX Profitability: An Analysis

[botolo86]

Hello Fellow Miners,

I have been playing with CEX for a while and I have just finished creating a huge spreadsheet to calculate profitability of an hypothetical investment.

In my spreadsheet, I am buying 10 BTC of GHS at current CEX market price (0.07428765 as I am writing). I start with 134.6118769 GHS. I am also considering a 27% difficulty increase and I am basing my payout per GHS according to the bitcoinwisdom calculator.

I am basing my conclusions with the idea that I stop mining on February 1 (of course, we can play more with the spreadsheet and create new scenarios).

Here are some interesting results.

SCENARIO 1 - GHS PRICE REMAINS THE SAME AND I DON'T REINVEST PROFIT IN GHS

In this case, as you can see from the spreadsheet, I will end up with a profit from my mining of 2.574129078 BTC. If I sum this amount to the profit from selling my GHS for the market price we are assuming, I would get a total of 12.57412908 BTC.

FINAL PROFIT: + 2.574129078 BTC

SCENARIO 2 - GHS PRICE REMAINS THE SAME AND I REINVEST MY DAILY PROFIT IN NEW GHS

In this case, I would not have a final profit from my mining because I continued investing the daily profit to buy new GHS. I would end up with 174.0088026 GHS and if I sell my GHS at the market price we are assuming in this scenario, I would get a total of 12.92670503 BTC.

FINAL PROFIT: + 2.92670503 BTC (Higher than just mining with no reinvestment in GHS)

SCENARIO 3 - GHS PRICE DECREASES 1% DAILY AND I DON'T REINVEST PROFIT IN GHS

In this case, my final profit from mining would be the same as Scenario 1, 2.574129078 BTC, but my final profit would be lower because I am now selling my GHS at a much lower market price. Market price would be 0.044944479 and this would give me 6.050060671 BTC, which summed up with the profit from mining would give me a final profit of 8.624189749 BTC.

FINAL PROFIT: - 1.37581025 BTC (I am loosing BTC)

SCENARIO 4 - GHS PRICE DECREASES 1% DAILY AND I REINVEST MY DAILY PROFIT IN NEW GHS

Here, I would not have a final profit from my mining, same thing as Scenario 2, because I kept reinvesting the profit to buy more GHS. I would end up with 186.0181859 GHS, more than the amount I get in Scenario 2 because we are assuming that price per GHS is decreasing. If I sell this amount of GHS at market price that we are assuming CEX will have with a 1% daily decrease, I would get 8.360490443 BTC.

FINAL PROFIT: - 1.63950956 BTC (I am loosing even more BTC)

I let you post your comments.

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Link to picture file
http://imgur.com/UnPyqoo

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[vpasic]

nice work bro!
shit, didn't know it was that bad to invest in cex.io!

[siameze]

cex.io is a joke. I still get a kick out of this: http://mentaso.com/bitcoin-news/cex-part-2-the-hacked-account-and-children-playing-grownups.html

Find another trustworthy place to invest your BTC.

[polarhei]

Well, It needs to be extremely careful. I personally put namecoin in the cex.io pool.

[botolo86]

Well, It needs to be extremely careful. I personally put namecoin in the cex.io pool.

You are right, there are many variables and it is almost impossible to have a perfect analysis. For example, we don't know how much the next difficulty will be, or the one after the next. We don't know how much will the value of GHS be in the future, we don't know the value of bitcoins, etc.

[nate008]

27% increase in difficulty is pure optimism.
There are lots of companies waiting for end of December and start of January to ship.

0.07428765  means around  50$/GH.
You would have to be insane to buy at this price while the competition , the Asic manufacturers are selling it at 10$/Gh.

[iluveunc]

I noticed you didn't include the potential profit gained from the Namecoin, Devcoin, and iXCoin that would also be gained by mining on CEX.io. I'm not sure it would even be profitable then but you do have to consider all sources of income that stem from the service to correctly predict a ROI.

[gamer4156]

27% increase in difficulty is pure optimism.
There are lots of companies waiting for end of December and start of January to ship.

0.07428765  means around  50$/GH.
You would have to be insane to buy at this price while the competition , the Asic manufacturers are selling it at 10$/Gh.

This^^. Put in 100% difficulty increase per month and I think you will have a more accurate analysis.

[dalamar96]

I am using CEX.io as well. The 27% diff increase is decent, maybe a little low. Last increase was just over 28%, the next one will probably be about 29%, so 30% / 2 weeks sounds good to me. Also losing 1% / day is crazy going with past numbers. Just my opinion.

Yes 50-70$ / GHs is nuts. And I agree, but it is the only way I can invest in mining at the moment. I can't afford a 5k ASIC miner right now (though I will at some point) not to mention they aren't shipping till Feb - Apr 2014. Not to mention the price of running one all day and night on your electricity bill.

Just a few thoughts from a different perspective

Chad

[botolo86]

Thanks a lot for all the comments. I will try to update my spreadsheet with the data you guys suggested.

[nate008]

I am using CEX.io as well. The 27% diff increase is decent, maybe a little low. Last increase was just over 28%, the next one will probably be about 29%, so 30% / 2 weeks sounds good to me. Also losing 1% / day is crazy going with past numbers. Just my opinion.

Yes 50-70$ / GHs is nuts. And I agree, but it is the only way I can invest in mining at the moment. I can't afford a 5k ASIC miner right now (though I will at some point) not to mention they aren't shipping till Feb - Apr 2014. Not to mention the price of running one all day and night on your electricity bill.

Just a few thoughts from a different perspective

Chad

Will you buy a crashed car because you can't afford a decent one , just because you have to have a car
Cex.io is the safest way to lose your investment.

[svetbg]

I personally invested in cex.io and for one week have ~ 0.35 btc profit.

[pand70]

I personally invested in cex.io and for one week have ~ 0.35 btc profit.

Care to give us the numbers of your investment and how this actually happened 

[svetbg]

I personally invested in cex.io and for one week have ~ 0.35 btc profit.

Care to give us the numbers of your investment and how this actually happened  

I bought 100 GHS and then sold it
1 week mining with 100 Gh/s ~ 0.4 btc.

[dalamar96]

Well, Unless you have done it and lost money, (and not during a difficulty change and you slept in) then I am sticking with it. I haven't lost anything yet, and have made right at .1 btc over the last week.

[kickbit]

I agree,
What's your own experience?

I got 0.23 BTC for two weeks on cex.io

[Vexatious]

I started with 0.5 BTC on November 30 and now have 0.77 (if I sold my GHs right now at .07). I mine for about 8 days, sell before the difficulty, put a reasonable buy order in at a lower GHs price and start the cycle again. I have done a bit of day trading in there with 1-2 of my total GHs.

I do agree with your analysis in theory. In practice it is a different matter. I reinvest the earned NMC back into GHs on a daily basis and reinvest BTC earned on market dips.

I've noticed that the price can begin to slide before a difficulty change anywhere from 1-4 days prior to the change. I analyze the charts and try to pick a price to get out and a price to get back in. But it takes work and attention to earn a profit. It's not for everyone, that's for sure.