Quote from: Stephen Gornick on March 30, 2013, 09:54:38 PM

Quote from: pixel on March 30, 2013, 09:19:55 PM

So we can come to the conclusion that mining is not really a good idea for me (I was talking litecoins remember)

There are temporary imbalances like right now where mining is very profitable (for either Bitcoin or Litecoin). But that situation can rapidly change because as additional hashing capacity comes online to take advantage of this profit opportunity, difficulty goes up. Unless the LTC/USD exchange rate rises at the same level, profitability starts to drop. It can even go negative (where you are paying more in electricity than the value of the coins mined).

Now some miners have the ability to pay for the electric bill with their fiat (e.g,. dollars) and then not spend the coins they mine. Then when the exchange rate goes up, they find fantastic gains by selling all their mined coins at a lofty valuation compared to the cost. But other miners don't have the ability (or desire) to speculate by paying the electricity out-of-pocket and instead sell their mined coins as they are earned. If the exchange rate spikes, they really don't see much gain because the difficulty generally spikes (Bitcoin's difficulty generally had perhaps abut a month or so lag behind the price).

So if you are looking to profit, you need to consider your competition. You will be mining and likely having to sell your mined coins to pay for the electricity. You will be competing against miners who are using rigs that have already paid for themselves from Bitcoin mining, and people who are paying the electric bills with fiat with the expectation that the exchange rate will be rising, so they aren't necessarily going to power down their rigs once mining gets to be unprofitable (which has happened in the past, and likely will happen again at some point).

One protection is that you would still have the hardware that can be sold (or used for other purposes) should Litecoin mining not pan out financially.

Thank you for this, still don't know which direction to go (I swear its like I have the inability to make up my mind). I feel like I'm leaning more towards mining sence I don't pay utilities.