Mining versus buying during a bear market

I'm thinking about grabbing two S19j Pro miners for $3,700 or just buying $3,700 in Bitcoin (which is around 0.16 BTC). My concern is that mining difficulty could keep increasing, and I might not be able to mine enough before I hit that 0.16 BTC mark. Right now, with the current mining difficulty, it looks like it would take over 250 days to mine that amount with two S19j Pro's, assuming I get free electricity. But in 250 days, the difficulty will likely be a lot higher... I really like the concept of mining since it lets me dollar cost average into the market and avoids KYC hassles.

<sigh> #1 question is: What do you pay for electricity? Miners are very power hungry... Would you theoretically earn enough to at least pay the electric bill? If not - forget it.

I pay $0.07cents USD per kw.

So in 250 days, you would have earned $3700 (I went with your numbers) and spent $2500. That means you need 750 days to get the investment back and from there you start your profits, that is if there are going to be any since we're going to have a halving in the meantime. And assuming the price would double by then, then you also need to take into account that you have bought those $3700 worth of BTC now! There are other ways to avoid KYC, especially with these low amounts, since you're going to get like $500 a month.

So does the math tells us mining is dead?

No! It tells you that buying gear now with electricity at 7 cents/kWh is really risky. People that have access to cheaper gear, that have already ROI, that have cheaper prices per kWh don't have the same problems as a new guy, not forgetting the ones trapped who have already paid in advance a lot of stuff who would just lose more money if they would stop mining. With a hashrate increase of 10% last period and maybe again going positive for sure mining is not dead, but the profits from it are really anemic soon to be hospitalized

Both mining and buying have different risk tolerance  and it depends on you what is your investment goal but buying bitcoin have less risk than mining because having a miner needs maintenance that can cost more and power rate changes but since you said it's free then it's profitable. The only problem that I think of buying bitcoin is that it does not direct generate earning as mining does.

Buying gear in a bear market is what everyone recommends. These S19j Pro's were selling for $13,000 USD at the peak so I am buying them at an 85% discount. 7cents per kw is not far from what the large mining farms are paying.

Very doubtful profit, considering that the having will be in about 13 months https://www.asicminervalue.com/miners/bitmain/antminer-s19j-pro-100th Do you have money to pay for mining and not sell bitcoins for several years? Do you have a guarantee that the cost of electricity will not increase? Even in my country prices are growing by 12-15% per year The cost of mining before halving is 14-20 thousand dollars, after halving the cost will be more expensive, and it’s not a bad decision to buy at 22 thousand dollars for bitcoin now, but use the using Dollar-Cost Averaging (DCA) Strategy.

I am not too concerned with the halving because that usually brings higher highs. I am more worried about the network difficulty. I can afford to pay for the electricity and hold. I have zero plans to sell until at least 2030. There is no guarantee that my electric company wont increase cost /kw but I live in a province that has the cheapest electricity in the world due to the massive hydro dams we have here (Quebec, Canada). What exactly do you mean by "cost of mining before halving is 14-20 thousand dollars" ?

Please don't go with this standardized cost of mining. This is just a gimmick invented by some bored blogger who had no article to write to make his quota. You can read what other miners, not just me  think of it here: https://bitcointalk.org/index.php?topic=5405856.0 Here on this board there are members with a far lower mining "cost" per BTC and I was one of them too prior to my contract expiring which had way better rates than anything you can possibly get in Europe nowadays. There is no such thing and for sure it ain't in some 25% margin, there are some who average spend 1/5 of a BTC to get one and there are some who mine at break-even point because if they don't they will have to sell all their assets to cover credits and loans. Of course, buying gear when it's 5x times cheaper is obvious, the thing is that not even that alone can sometimes offset the energy prices. Let's look at the 7 to 5 cents difference. 3000W running 24 hours is 72kwh, in one instance it is $5.04 in the other is $3.60. Earnings right now are at 0.06 per th/s so that's $6.60 per miner. The first miner makes $1.56 second one makes $3, 25% drop in price, and the first miner mines at a loss the second one still makes $1.4. Same for a difficulty increase with linear price. Also note, it's not that I'm telling you my crystal ball is 101% sure you're going to lose money, what I want to point out is the risks of doing so and if the KYC thing and the DCA income are enough of an offset for the pain in the ass those miners might turn out to be. Canada you say, so no much of a heat issue but noise and maintenance will still be around.

It sure is a scary time for miners these days. I am surprised hardware is not cheaper. It's cold where I live so that is an advantage for once! I just setup an AC Infinity Airlift T16 fan for airflow in my garage. That keeps the S19j Pro fans running at 3500rpm so not much noise anymore.

Only do mining if your electricity cost is profitable because mining is for long term investment and will definitely generate more money than buying upfront since you can sell the rig afterwards. Only buy token if your electricity cost is expensive and not profitable because it’s just a waste of time and money to mine at loss than buying the tokens up front. FYI. You will still need to KYC if you mine your tokens when you are already cashing out your profit to fiat. You will still need CEX no matter what happened if you are planning to get a fiat out of your token investment.

My hope is that in 2030 when I am ready to get out, there will be other options or that BTC will be accepted for what I want to purchase.

Once I pay the unit off my cost is 50% of price of BTC many have my deal. I buy the gear and give exactly ½ the coins to the host. So a 100th s19 gives me 50th for free until it breaks or I sell it. that is 50 x 6.5 = 3.25 a day for a 1500 dollar machine  around 462 days and it then generates coins at half price. as long as I do not over expand to quickly I am good to go.

That's a good deal if you can get it.  I haven't heard of any hosts that offer this to the community at large and assume this is a private deal you have with your partner, right?  If not, I'd love to hear how I could get into something like this.  I currently have gear sitting around collecting dust that would be better put to use mining away for someone else and me getting 1/2 of what is mined.  I think a lot of people, especially now at the bottom of the market would love to participate in something like that.  Did I miss out on something?  Not a lot of people can profitably operate a miner while only keeping 50% of the revenue.

I am getting paid more using NiceHash. I average about 31,000 - 33,0000 satoshi's per day with a single 100th machine.

The funny thing is, that, maybe, just maybe the miners themselves can be treated as assets. If a Bull cycle comes, the asic miner prices will shoot up again. Some people even do both things even used they sell them for more bitcoin while maybe renewing with more efficient models. Since we can't guess the future, it is unknown. I have seen many past scenarios where buying bitcoin and holding would have been better than buying miners. But sometimes, if you bought the miners cheap (like with a bear market) and then later because of the Bull market they end producing more than anticipated reaching their ROI faster. So yeah make your guess. I don't like Nicehash, its not Bitcoin, they rent your hashrate for whatever clients want to do. If the altcoins are green you will get that perception, when altcoins go red, well you will see. It happened in 2018, it will happen again. Supposedly when altcoins go red, they now fallback to Bitcoin. There are other rentals with more control too where YOU define the fallback pool, etc.

Depends on many variables Right now it shows me 0.00030942 BTC and $6.93  but Viabtc is 0.00028699 BTC and $ 6.41338274. I'm a bit unsure how would Nicehash pay more if it weren't just for luck, and just from renting power for sure you can't get that much difference constantly as it would make no sense from the buyer side to overpay. Anyhow, last 7 days we had a -4.5% drop in price and we're going to get 3% in diff, so, there goes the Nicehash bonus!

For profit, the average person is always better to buy bitcoin, never mine it, and don't buy at the top. The company that sells the new miner will raise the price of it to take away your profits and maximize theirs. The person that sells a used miner knows that there is no more profit in it. The price of bitcoin and the difficulty will rise faster than you can mine it.