Direct Investment Versus Mining Bitcoin

Gold BitcoinI’ve heard this question asked  a lot lately, “should I buy an ASIC miner or invest directly in Bitcoin?” I asked myself the same thing back in November. After much research I did both, investing $200 in Bitcoin and $150 on an ASIC. Today my Bitcoin purchase is worth $484.40 US Dollars ($29.18 USD / 1 BTC) well over doubling my initial investment. The $150 Butterfly Labs Jalapeno hasn’t arrived yet, though I’m told I can get a refund if I’d like. With that said, I’m happy with my choice and will likely do the same again. My analysis and explanation follows.

Initial Involvement

Though I’d read about Bitcoin in 2011 it wasn’t until mid 2012 that I finally got involved. For much of last year I was mining Bitcoin on a single Radeon 6850 which brought in somewhere between 30-60 Millibits (.030 – .060 BTC) per day. What’s more is that I wasn’t even mining constantly as my GPU had a hard time keeping up while I was working. By November I’d been watching  the exchange rate on MtGox for a few months and felt I had a decent enough understanding of Bitcoin to make a  small investment.

Direct Investment

I decided to split my small, experimental investment in two by preordering a BFL Jalapeno and by purchasing $200 worth of Bitcoin. After transaction fees through BitInstant and a small fee from MtGox I ended up purchasing 16.6 Bitcoins for roughly $212. Three months later those same Bitcoin are valued at $484.20. Were I to cash out today I’d do so for a profit of $270.20.

ASIC Preorder

My Jalapeno hasn’t arrived and, according to today’s announcement, likely won’t much earlier than June of this year. Considering that I can still get a refund if I’d like, my preorder is worth the $150 plus shipping that I originally paid. If I’d put this $150 directly into Bitcoin then I’d have made about $215 at this point.

Going Forward

Over the past three months my direct investment far outperformed my mining investment. I can’t predict the future and as such I’m not one for speculation. A meteor could hit Butterfly Labs tomorrow for all I know, shit happens. My position from here on out is much the same as it was back in November. I’m keeping my pre-order with Butterfly Labs for the moment. If they experience further delays or their products underperform significantly then I may ask for a refund and try and get in on Avalon’s third batch. However, if they ship in the next week or two and meet or exceed performance specs then I’ll likely look to upgrade. I’ve also picked up a few more coins lately via Coinbase.

I don’t plan on selling my Bitcoins either. Any number of good or bad things could happen in the next few weeks and months to influence the price. I’ll continue to experiment with mining, with making purchases in Bitcoin, and with the different ways Bitcoin can be used. I don’t have so much invested that I’d be hurting if things don’t work out, but I have enough in that I could make a bit on the upside.

tips

I’d like to hear your feedback so I’ll tip the first ten people that list their investment plan/background in the comments 50 Millibits each (.05 BTC / $1.47 – Make sure to post an address).