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Mining for non-miners

Author's note: This article is part of an ongoing blog about my adventures in the world of alternate currencies.

What I am seeing while logged into my CEX.io account is truly tempting me to dump my remaining Devcoins so that I can improve the picture even more. My most recent purchase of GHZ brought my total up to 0.768 a little over four hours ago. Following this purchase are nine transactions representing deposits made to my balance following successful mining activity.

One GHZ currently sells for 0.082 BTC, and I only have three quarters of that. Did I mention I am dreadfully short of Bitcoins right now? So it's safe to say that I invested around 0.06 BTC, a small amount of which was previous mining payouts as I didn't buy my hashing power all at the same time.

Within four hours my Bitcoin balance (which was at zero) is now showing 0.00011981 BTC.

Contrast this with the most recent mcxFee share dividend of 0.00001325 BTC. The mcxFee share payout is roughly one tenth the amount of the mining payout, it covers a longer period of time (six hours), and here's the kicker, I paid way more for those shares. mcxFee shares are currently trading for 0.2442 BTC each. I own six. I paid more than the current going rate for them, so you can imagine my frustration right now, but even if I value them at the going rate, I find that it costs me 1.4652 BTC to get something which pays a dividend that is ten times less than the one I earn from my investment of 0.06 BTC!

Of course, mcxFee shares are an investment in future potential whereas mining shares will over time depreciate as difficulty rises. Still, although no one deliberately cheated me I feel like I got ripped off with mcxFee shares.

And I also know why despite all the complaints about rising difficulty, people still buy mining equipment and pay higher electric bills knowing there's a good chance they won't even recoup the initial costs. The return on mining is still far higher than the return on anything else. Especially if you can benefit from the economies of scale no matter how small your investment. CEX.io opened up that door for me and many other small time non-miners.

If 0.06 BTC worth of hashing power can yield 0.00011981 BTC within four hours, imagine what an entire Bitcoin or two could yield! Just thinking about it is enough to tempt me to sell off about six million of them and then turn it into hashing power. It would sure be nice to wake up the next day and find there was a respectable amount of Bitcoin in my balance.

Nonetheless I probably won't sell off major amounts of DVC tonight, nor will I sell off my mcxFee shares or any of the other investments in which I have Bitcoins tied up. The reason: diversification. No matter how great the return is I don't want to put too much into one place. But I will be putting more into this one so that it can grow at a good rate.

One way that I would definitely recommend using CEX.io for is as a way to turn CoinAd and BitVisitor revenue into hashing power that yields more Bitcoin. There does not appear to be a minimum deposit or order amount. Truly, no amount of hashing power is too small.

I paused in writing this to go to the Bitcoin Forum and find out if anyone is accusing CEX.io of being a scam, and I did find a couple threads with such accusations and a couple more indicating that the price for hashing power is too high to make it profitable. Others have mentioned that they've done quite well on CEX.io and made more on trading their hashing powers than they have with mining. This thread indicates something I've long suspected which is that mining difficulty is simply rising too quickly for it to be worth investing in mining hardware.

This definitely gives me pause about selling off my Devcoins to be able to afford more hashing power. I may still do it, but not immediately. It also tells me that it's smart to start out with small amounts and see what happens. I'm told mining difficulty increases every fifteen days, so it won't take long for the reality to become evident. One person on the thread indicated that regardless of the actual return on investment, mining was a lot of fun.

One thing I don't want to think too hard about is what all this says about how much I paid for mcxFee shares vs. what I'm getting out of them. The snapshot right now is that mining is far more profitable. And there are plenty of people saying mining isn't profitable anymore.

But for getting the experience without all the hassle of buying, setting up and running your own hardware, there certainly isn't an easier way to get involved in mining than by sending some Bitcoin to your CEX.io account and trading it for some hashing power and then waiting an hour or two.

Devtome writers


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