Having averaged the market value rate as appears on the readily accessible internet home pages for a number of major exchanges, we have a point of reference with which to compare mining, or simulated mining experiences. These occupy the role of financing the purchase before obtaining the bitcoin.
For actual mining experience, costs arise as incident to the activity itself. Mining refers to the process of using specialized computer equipment to receive competitively awarded cash bounties for do the computer ledger work necessary to record bitcoin transactions. Participation requires some computer knowledge, a cash outlay for equipment, and an ongoing expense to pay for the electricity required to carry on the project. There is often an expense, often neglected in analysis for wear and tear on the computer.
The economics of this establishes a clear rule of thumb. Don't do actual mining. Mining exists in an artificially contrived scenario, the purpose of which is to obtain the needed ledger work, which supporting the smallest possible transaction fee for the consumer. The more competitive miner may make a profit, but the aggregate revenue outcome is fixed at breaking even. Setting zero profitability as the average, a less competitive miner will actually lose money. Dabblers and dilletantes.. be warned.
Simulated mining refers to a contractual scenario which appears to approximate the characteristics of mining, and which is represented as showing a yield which results from actual mining activities, but which does not require an upfront cash outlay. Typically, these arrangements do not have an actual method for verifying that you are actually receiving payment at the same rate as specified in the contract.
The consumer pays up front, for these types of experience, but receiving no little, or no, bitcoin at the time of signing, but purchases a stream of future income. As the consumer purchases a percentage of the return, the consumer cannot profit from the mining contract to any extent more than the mining company can actually perform mining. The consumer will break even only if the consumer selects a highly competitive mining company. There are many instances in which the consumer purchases into a hypothetically mining contract only to find out that she or he has been conned, and will not receive a cent on the investment. Even competitive miners typically charge a percentage fee on the amount of mining capacity used, subtracted from the bitcoin mined on that persons behalf.
The risk inherent in such a contract notwithstanding, it is possible to determine, with respect to a competitive, honest miner, how much return the consumer must return, over a finite specified period of time in order to break even. In theory, the payout is made indefinitely into the future. In reality, the contracts have escape clauses which allow the mining company to stop paying out upon the occurrence of certain conditions (the contract no longer benefits the company). If one makes a reasonable guess as to when the bitcoin mining will no longer benefit the mining company, one can determine if the return justifies the initial expense. At the current time, there are not- not a single- pseudo mining company which provides a payout which clearly performs as well as just buying the bitcoin directly (provided one does so without getting gouged). The value of a mining contract, if any, consists of its value as a purchase mechanism, if other instantaneously methods do not provide the "no gouge" experience.
The relevance of mining to the Bitlanders participant consists of comparing the outcome of a mining contract to that of a Bitlander member who has paid to "buy in" to a higher rate. It is possible to compare a projected mining payout schedule with that of a Bitlander "buy in" payout. The similarity stops with a side by side comparison of the numbers. The mining contract yields truly passive income, not contingent on any further agent on the part of the purchaser. The Bitlander who "buys in" has to continue to do work to use the acquired competitive rate of pay. If the Bitlander stops working, the Bitlander recovers very little on the investment.
As it happens, I had purchased a small mining contract with more of the more trusted mining companies in the industry. Although I refrain here from providing the actual numbers of a comparative analysis between the mining contract, and a Bitlander's buyin, or to give you a categorical recommendation on what you should do... I will say this... If you are going to do a Bitlanders buyin (to buy gems), be prepared to work hard.
