Mining vs buying cryptocurrencies

Many people ask what is more profitable mining or buying coins. Answering such a question is not an easy thing. There are many factors which can affect the final result. Fortunately, we have real world examples which we can use to compare those two.

At Alte.Capital we made a comparison between investing 1500 EUR in building 6 x GPU mining rig and investing the same amount of money for example into Ethereum.

We will show you two examples. First one we started in June 2016 and second, we was started 2 months later in August 2016.

Assumptions

  • Data for mining amounts comes from real mining operations on mining pool. A rig which was build using 6 Radeon Rx 470 4GB which was mining Eth for 147 MH/s. Please note that amounts should be considered as approximate.
  • Amounts of mined ETH are real payouts from mining pool. Electric costs are also deducted.
  • In June and August, 2016 projected return of investment for 6 x GPU rig was about 9–12 months.
  • All prices are in Euro and come from the end of each month.

Let’s see how it was

First example. We start our mining operations or buy ETH in June 2016.

We managed to buy 136 ETH for the average price of 11 EUR. Not much happened uUntil end of the year 2016. By the end of January 2017, we managed to mine almost 105 ETH. Mining difficulty was slowly rising and until end of March 2017 we mined about 140 ETH. So from that point, our mining profits became better than buying and we were still mining. As a result after 12 months at the end of June 2017, we got about 152 ETH from mining vs 136 ETH bought.

And with the price of ETH around 240 EUR our profit was about 38730 EUR from mining vs 32640 EUR from buying.

Both results were quite spectacular regarding ROI, however starting mining operations was better. Here are detailed amounts.

Now let’s see how the results would have looked if we started two months later in August 2016.

Price at that time was 8 EUR/ETH, so we managed to buy about 187,5 ETH. Until the end of March, we managed to mine about 80.7 ETH (comparing to 140 ETH from the first example). In this case, we can see that buying ETH was almost 2 times better than mining (8800 EUR vs 4700 EUR).

Later on, after ETH price soared, our results became very good, but still investing was about 2 times better than mining. At the end of August 2017, our results were great.

Profit from buying 60 000 EUR vs 32200 EUR profit from mining.

Conclusion

As you can see the most important factors are the timing when we start and Eth price changes.

In Alte.Capital we consider buying as a better option.

It’s worth noting that there are other factors than profits which you should consider about mining. When you build your mining rig yourself:

  • You have better incentive to understand blockchain technology. You will learn more
  • Emotional lower risk of investment. If prices crash you can still sell GPU equipment. This can be very important for some people, especially with lower risk attitude

Please also have in mind that in a few months Ethereum is switching to POS and after that switch no one can really tell what will happen and how markets will react. Good luck!

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