A quick word about BitCoin Mining

BCMiningYesterday afternoon, I took my entire bitcoin holdings (0.1352 BC) and transferred it to my CEX.IO account. CEX.IO allows me to trade my BitCoins for units called GHS (Gigahertz/second). This payment is used to buy time on a system that is mining new BitCoins. Every quarter of an hour, it returns a portion of a new bitcoin to me in “rewards” (think of that as a stock dividend).

I used the 0.1352BC to buy 5.64GHS, and then started receiving those BC rewards. After about 12 hours, I gained 0.00046365BC in rewards. Converting that into US dollars, I gained $0.28 in half a day.

So, thirty cents for half a day’s work. Not too impressive, huh? But check this out (I’m going to do a little hand-waving with treating one day’s anecdotal evidence as though it were an average). If we say that yesterday’s performance was typical, then $0.30/half day means $0.60/day. And, with an average of 30 days in a month, that comes to $18/month. And remember that this is on an investment of $100. That means an 18% return rate per month, or 216% per year.

Now, with the hand-waving out of the way, let’s point out the pitfalls in that presumption.

1) One day’s balance does not equal an average that can be counted upon. It’s just ridiculous on the face of it. I’m not counting on it staying that way, I’m just extrapolating on the only data I have. As new data comes in, I can adjust that either way.

2) The price of GHS/BC is not static. As that price fluctuates, the value of the investment I’ve already made will increase or decrease on the winds of chance. And if anybody’s watched the volatility of BitCoin pricing, you know that chance is fickle with this commodity.

3) The price of BitCoins is not static. I touched on this above, but BitCoin is famous for fluctuating wildly. It is a new currency, and as nations argue over whether to accept it, as news organizations try to decide whether it’s Evil/Libertarian/Criminal money, and as people become more interested in the Gold Rush mentality of the currency, it will continue to trade heavily.

What does all this mean? I Dunno. I’m still checking it out, making small investments and watching them. But I think I can conclude that, even for small investors, the idea of seriously impressive returns is possible.

Flattr this!