Can I get compound growth if I invest in Bitcoin?
Einstein – “Compound interest is the eighth wonder of the world; one who understands it earns it while one who does not must pay it.”
The future of Bitcoin is frequently discussed; could its acceptance grow? The value is expected to rise. How secure is it as a potential investment?
I’ve heard a lot of debates about whether or not to trade, mine, and use cloud mining, but I’ve never heard anyone talk about applying professional investing theory to Bitcoin or, at the very least, discussing it in that way. Let’s assume for the moment that Bitcoin has a bright future and that it will gain in acceptance, maintain its value, or even increase in value given that, in our opinion, it has a more valuable foundation than fiat money.
If you share my opinion, I’ve decided to approach this like a professional investor. For instance, I can invest $1,000 (or about $1,600 USD), but I want to consider the safest and most effective way to do so in Bitcoin.
The most crucial guideline for anyone who considers themselves to be a professional investor is to follow the rule of compound growth. If you treat your account or wallet like a current account, you simply won’t achieve your full potential.
A quick example:
Andrew deposits 10,000 GBP and reinvests his interest each and every year in order to earn compound growth on his shares, which average 1% growth each month (1% seems quite meager, but we would like our example to become conservative as well as demonstrate the strength of this). His account would appear like this;
Year 1 is 11,200; Year 2 is over 12,500; and so on through Year 10, which is over 31,000.
While Andrew more than triples his, Mark will remain at 10,000 if he decides to take 1,200 toward the end of December to treat himself for Christmas. If Mark continues to draw during bad years or decides to take more, he may even lose money.
Later on in this article, I’ll demonstrate how to significantly improve this using extremely conservative numbers. By doing so, you’ll learn why Einstein dubbed compound growth the eighth wonder of the world.
Returning to the mining, you can find a variety of websites by searching Google for “bitcoin mining profitability calculator.” Assuming you enter the correct difficulty and exchange rate, you should be fine. However, the majority of these calculators fail to account for the rise in mining difficulty.
Let’s now assume that we have chosen the least expensive method of mining; because we live in England, the cost of operating and maintaining the Cloudmining warehouses will be less than half that of a typical electricity bill, and we will also save space.
We can purchase 3 x 1000Ghs Cloudmining contracts for 1000 GBP, and with the remaining 100, we can purchase 5 x 50Ghs Cloudmining contracts, giving us a total of 3250Ghs, or 3.25Th.
As you will see, the mining difficulty has increased roughly twice per month, or every 11.7 days, over the past three months, according to the most recent and pertinent data. Because we are using averages, it makes no sense to fuss over 0.3 of a day every 12 days, and what we are doing is only improving our accuracy now, I’ll work under the assumption that the difficulty increases by 4.80% every 12 days. I don’t want to get criticized for this, so I won’t argue against it.
I’m going to calculate our earnings after deducting the costs and add the difficulty to the following session in order to work through our earning potential. the new hashing power that was acquired with the proceeds. I’m concentrating on the average rising difficulty of 4.98% as well as the average falling hashing power cost of 10%.
The hashing power won’t decrease by 10% every twelve days, which is the simple truth, but it must move in that direction to continue to be profitable for the buyers. The hashing power needed to be reduced to a reasonable level because, as was observed with CEX more than a year ago, it wasn’t economically feasible for people.
It was discovered that, even by conservative estimates, you could QUICKLY earn at least $1,000 within six months and possibly double that amount within a year.
Despite the fact that the difficulty is rising quickly, the cost of hashing power is also rising sharply. So regardless of your strategy, if you apply the principle of reinvesting your earnings, or at least a sizable portion of your earnings during a period when the hashing price declines (the price per Ghs has never increased), you will make a tidy sum of money.
What I’m trying to demonstrate is that mining can certainly pay off if you approach it like any other legitimate business and not as a gimmick. You must adopt the mindset that six months, a year, or even three years is not a long time (especially if you are making money while you sleep), and I firmly believe that you should spend an hour or two on Excel and online to make sure that you adopt the right strategy.
When you consider that bitcoin is still in its infancy and is fundamentally undervalued, it becomes clear that mining bitcoins can be a lucrative business and that it is not as far gone as some would have you believe.