Mine or buy BTC?

[ARapalo]

Apparently after requesting to get out of this newbie section, I'm still here so I guess I'll just ask this question here first. Mining bitcoins looks pretty interesting, but based on the current difficulties and BTC value, I'm wondering if I should mine or buy BTC to invest.

I currently don't have a dedicated computer to mine with, but my current computer I'm using right now is able to hold only ONE video card. The cost of buying only one video card to start mining is not that much, but one video card will hardly generate any notable amount of BTC. But if I'll want a full dedicated miner, then I'll need at least a rig of 3 video cards, which I'll need to invest much more money to buy all the other hardware too. Is it more wise to spend the money on hardware and get a small steady income of BTC, or use this money to instantly buy the BTC and try to speculate to earn more BTC this way?

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[Stephen Gornick]

if I'll want a full dedicated miner, then I'll need at least a rig of 3 video cards, which I'll need to invest much more money to buy all the other hardware too. Is it more wise to spend the money on hardware and get a small steady income of BTC, or use this money to instantly buy the BTC and try to speculate to earn more BTC this way?

Both methods have risk.  Over the past year or so it was true that buying hardware and mining was kind of like a hedge -- if the bitcoin exchange rate crashed or difficulty rose too fast then you could always sell the hardware and come close to breaking even or maybe you would lose but at most it would be less than 50%.

That might still be true but the risk now is that FPGAs will push GPUs out -- GPU mining might end up becoming unprofitable, unless you are getting electricity at a rate less than average (e.g., $0.11 per kWh).  The problem with buying FPGAs versus GPUs is that you no longer have this stop-loss exit strategy as the used FPGAs either have no value or are not as valuable when compared to how used GPUs still hold a fair amount of their value.

So, if you have cheap electricity and tech skills then buying some used GPUs and mining might not be the worst use of funds, but there is by no means a guarantee that you'll make any profit (e.g., positive return on investment and positive cash flow after a year or so, when including the equipment costs).

As far as buying bitcoins themselves -- hoping that they'll increase in value in the future, well that is taking a speculative risk as well.

Either way -- don't put more on the line than you can afford to lose.

[bitcoinsarefun]

It all depends on the cost of your electricity ... take a look at what you can afford equipment wise then based on that figure out how much you will make versus what you will pay per kwh in eletricity

[Nefario]

Buying is by far the easiest and quickest method to getting some BTC, however, mining is the most anonymous.


If you would like to keep govs and banks from knowing you're involved with bitcoin then goahead and mine, otherwise buying from an exchange is generally the better option.

[John (John K.)]

Apparently after requesting to get out of this newbie section, I'm still here so I guess I'll just ask this question here first. Mining bitcoins looks pretty interesting, but based on the current difficulties and BTC value, I'm wondering if I should mine or buy BTC to invest.

I currently don't have a dedicated computer to mine with, but my current computer I'm using right now is able to hold only ONE video card. The cost of buying only one video card to start mining is not that much, but one video card will hardly generate any notable amount of BTC. But if I'll want a full dedicated miner, then I'll need at least a rig of 3 video cards, which I'll need to invest much more money to buy all the other hardware too. Is it more wise to spend the money on hardware and get a small steady income of BTC, or use this money to instantly buy the BTC and try to speculate to earn more BTC this way?

Depending if you want more or less. You might start to mine now but regret 1-2 months later *if* the prices soar high and you don't have more coins to be worthwhile. You might buy now and hold, that's the easier way to get more coins in a short time and lower investment. FPGA's and ASIC's will put your GPU miner out of the game if your power costs are high, remember.

[moocow1452]

Mine Litecoin -> Buy Bitcoin -> Sell for Cash is the latest trend.

[ARapalo]

Thanks guys. For now, I bought one video card to start mining, and I bought a little bit of BTC to speculate also. I'll see which one would net me the most before deciding to spend on a dedicated rig vs buying more BTC to speculate.

It seems the BTC value does not swing much to make much money though. Here is to hoping....

[Xanax]

Mine Litecoin -> Buy Bitcoin -> Sell for Cash is the latest trend.

 Interesting. I might do this.

[amytron]

try to get a used 5850

[Xanax]

 Well mining really does take a lot of effort to get started. Also buying is easier but can take a lot of money out of your pocket if you don't know how to invest and make profit.

 My opinions -

 ( Mining ) -
 Problem with mining is how much it is and how much to start. Also the thing is electric bills. They can be so much just to produce 1 coin DAILY. But the good side is you get coins and its much more anonymous.

 ( Buying ) -
 Problem with buying is it's not so anonymous. Because you have to fill out information and put your bank in. You might get scammed or ripped off for that's the problem. But a good side is if each coin is down while you buy then once it goes back up you can make a good profit.


 I suggest buying when you first start with buying bitcoins then move onto mining once you can afford it and you know what your doing.

  

[blablahblah]

Well, I tried both. After a week of compiling software (yes, it was that bad), massaging PyCUDA and generally ripping my hair out, I got my 9600GT to generate a whopping 0.015BTC after a week of intermittent operation.

Experimental findings:
-It works, kind of.
-A lot of additional time+effort investment would be required to make the PC usable at the same time for general-purpose things.
-The graphics card gets hot and the fan is really good at catching dust.

Buying bitcoins, experimental findings:
-Depending on your currency and region, you might be able to buy bitcoins very easily, OR you might have to pay your local bank enormous transaction fees for the privilege of sending money overseas to wherever the exchange has their account. That was a big barrier to entry for me.
-Once you're up and running, buying and selling seems to work.

Conclusions:
Unless you're willing to invest the time and effort in an FPGA rig, I would just buy coins as I need them. Unless the next generation graphics cards can make massive reductions in power consumption, I see that as a dead end. In the past I bought a couple of "silent" graphics cards of the Asus variety, foolishly believing that a fan is just another possible point of failure. Neither of them lasted more than 2 years - I think the manufacturers deliberately tune their hardware to run hot, so that consumers keep coming back for more junk when it breaks. AKA: planned obsolescence. I suspect many "professional" miners forgot to account for premature equipment failure over the last year or so.

Moreover, the economics of mining doesn't add up for most people. If electricity costs you 7c /kWh, at this stage you'll need to achieve more than 50~60Mh for every 100W just to break even, and that's not taking into account ANY other costs. However, the economics might vary seasonally if you rely on electric heating.

As for speculation/"investing", it's a zero sum game - whenever you hoard coins while the price is going up, somebody else is kicking themselves for having sold you those coins. I'd look at real investments like competing against Paypal and the CC behemoths. If you help make Bitcoin more useful and accessible to the general population, its real value goes up. Why make things hard?