Originally Posted by wedge
The way I see it, it's like this:
The people that started mining a year ago probably wished they'd started the year before that.
The people starting today wish they started a year ago.
And the people that start next year will wish they started today.
And so that trend will continue...
The value of all the coins is loosely connected to their difficulty (obviously there are MANY variables at play, that's why I say 'loosely'). But to put it in the simplest context: The harder it is to mine a coin, the more valuable it will become. So as long as more new people start mining, the difficulties will rise, and so will the values. Which means the ship is still anchored at port waiting for more passengers. It won't sail until it's reached capacity, and we're years away from that.
Having said that, the early adopters will earn more profit than the later ones. But the whole cryptocoin economy is in its infancy, at best. Years from now, we'll all be considered early adopters. Most of the "professional" estimates I can find, say that bitcoin will go fully mainstream in about 5 - 6 years. That's plenty of time for us early adopters to fill our wallets as much as we can before the big payday.
Well, the issue is when new ways to mine come online. Look at the ASIC boom - if you're one of the first to preorder or get an ASIC miner, you're going to see big yields for a while, then they'll taper off. If half of the ASICs are legit, this will be the biggest increase in computing power since Bitcoin started. You have new GPUs, but you're getting maybe 10% annual gains. These are 50x more energy-efficient, and several times better in performance/$.
Ok, but let's move along. Take an ASIC miner, you won't get good yields if you buy on pre-order "now", and you won't get a good price if you buy one of the first miners to ship. The cheapest models are $100 USB ASICs that do ~300MH/s. They *would* pay off in 9 months or so, if the difficulty doesn't increase. But of course it will. Much of the profit will come from mining hardware. Being generous, take the USBs, you'll break even in 9 months and see maybe a 50% return the 2nd year, 20% the third year, etc. There's so much money in ASIC miners ($100 for a 2.5W TDP ASIC, $500 for something in the 40W range - Intel's i3's have multiple times the transistor count and sell for ~ $100), that of course there's going to be a huge race in building them... eventually there will be excess supply, which will push prices on the hardware lower, and most likely you'll see similar returns ($100 ASIC goes to $40, takes 9 months to pay off and returns 50% the second year..).
A slight aside, those $100 ASICs are $100 "right now", and $80 "a month from now". They depreciate quickly. So factor in the depreciation as well.
Put simply, you're looking at 25% annualized return at best, over a 2-year period (and depreciating quickly thereafter). 25% yield, locking in all your capital on some equipment that's subject to rapid devaluation with every new ASIC release.
I'd wager you're best off preordering the newest ASICs immediately when they're available to pre-order, and flipping those. If you did this, you could make a 50% return in a matter of a couple months without any mining, and you'd have the principal back to reinvest. One more issue, the BTC market is very easy to manipulate - fake ASICs can drop the price of real ASICs, companies could be releasing something at 50% speed because they know people will buy the 40% faster model next year to keep up. I'm not saying it's entirely a fool's game but it certainly isn't the money printer most people think of it as.
If you just want to make money, do some research in the stock market, and once you get down the basics, look at options. Certainly not a get rich quick scheme, you'll need to put in at least a couple weeks of observing the market, learning technicals, learning fundamentals, etc. before you get started. If a stock moves 10% in a day, you can close to double up on what you paid for options. Say you only want to spend 20 minutes a day looking at market research, and trading at most once or twice a week, you're still looking at 20% annual return if you know what you're doing, investing conservatively.