Can I get compound growth if I invest in Bitcoins? There are many discussions about the future of Bitcoin. Could it gain popularity? Will Bitcoin’s value rise? Is it safe to invest in Bitcoin? Although I have heard many discussions about whether or not to trade or mine, or cloud mining, I have never heard of professional investing. Or at least the application of professional investing to Bitcoin. Let’s say that Bitcoin has a bright future. It will be more popular than ever, its value will continue to rise, and it will even increase in value, because it is fundamentally cheaper than fiat currency.
Profesional Investor
If this sounds like your view, I decided to approach this as a professional investor. I can afford to invest 1,000 GBP (approx 1,600 US dollars), but I will think about how I can invest this money into Bitcoin in the most efficient and safest way. Anyone who considers themselves a professional investor should use the rule of compounding growth. If you treat your account or wallet like a current account, you won’t be able to realize your full potential.
Andrew would like to see compound interest on his shares, which averages 1% per month. (1% seems a bit ridiculous, but we want our example to be conservative and demonstrate the strength of this rule) He deposits 10,000 GBP each year and he reinvests the interest. Mark may decide to take 1,200 to treat himself to Christmas. However, if he continues to draw on bad years or decides not to take anymore, his 10,000 will remain the same. Andrew’s net worth is more than three times that of Mark. In this article, I will show you how to use very conservative figures to make substantial improvements to this and explain why Einstein called compound growth the eight wonders of the world. Let’s return to mining.
Profitability
If you want to calculate the profitability of mining your own hardware, you can do so online by searching Google for bitcoin mining profitability calculator. Just make sure you enter the correct difficulty and exchange rate and you’ll be fine. However, most bitcoin profitability calculators fail to account for the rise in mining difficulty. Let’s say we choose the most affordable way to mine. Because we live in England, the running and maintenance costs for Cloudmining warehouses are less than half of what an average electricity bill is.
We also save space. The most recent data on the mining difficulty over the past three months has been taken. You will see that the difficulty rises approximately twice a month, or more precisely every 11.7 days. I will therefore work with the assumption that the difficulty increases by 4.80% every 12 calendar days. It is not worth worrying about 0.3 of a daily when we are operating with averages. Also, what we are doing is only increasing our accuracy. I don’t want to be criticised for this. After subtracting the costs, I will calculate our earnings and add the difficulty to the next session to determine our earnings potential.
Earnings
The earnings will be followed by the addition of the new hashing powers. I am focusing on the average increasing difficulty of 4.98% and the average decreasing cost for the hashing powers of 10%. It’s not going as smoothly as it seems. The hashing power won’t decrease by 10% every twelfth night, but it will have to move in that direction to be viable for buyers. It was clear that the hashing power was not economically viable for people more than a year ago.
Even using conservative estimates, you can easily beak within 6 months and could potentially double your earnings within a year. While the difficulty rate is rising at a rapid rate, the hashing power is also decreasing and becoming more expensive. Whatever your approach, you can make a small fortune if you reinvest your earnings (or at least a portion) as soon as the hashing cost drops (the cost per Ghs has not gone up).
You will reap the benefits of mining if you treat it as a business and not as a scam. It doesn’t matter if it takes 6 months, a year, or three years (especially if you’re making money while you sleep), and you should spend at least an hour on excel and online to ensure you have a proper approach.