Lets look at the general process. (from a total newbie point of view)
Here comes the wave:
$ Money (fiat currency) ==> Bitcoins BTC ==> Ghash/s mining power ==> BTC ==> $ Money
Now there can be a few variations depending on your situation.
To acquire Bitcoins you can purchase them on an exchange. You send $$ usually using a bank deposit to the dealer and receive your Bitcoins to your wallet address.
or you can use your hardware (CPU, Video cards or ASIC) to mine some alternate currencies like Dogecoins or Quarks. You then trade those coins on an exchange (crypsy, bter, ext..) I use Coins-e myself.
You then withdraw your Bitcoins from the exchange and send them to CEX.io
Why CEX.io ?
CEX.io is a Bitcoin commodity exchange that lets you purchase Ghash of mining power in exchange for BTC.
They maintain the hardware and setup the mining for you. Instantly. No fees. No tech knowledge required.
And you own the small piece of hardware and can resell it anytime you want.
Go on.. Sign up now.. it's free and easy. Even if you don't have any BTC yet.
What's in it for me (and you) ?
If you signup a new account using my link to CEX.io then I get a 3% bonus for the Ghash you may purchase. This doesn't have any effect on your own account at all. It's just my reward for advertising their system.
If you post a comment below with your email address then I will send you some IXC (Ixcoins) and DVC (Devcoins) These are minor currencies that you mine at the same time as BTC (Bitcoins). You can withdraw them and trade them on an exchange as you wish.
The Advantages of using CEX.io
For Bitcoin mining you now require a powerful ASIC system. A home computer is not powerful enough anymore.
Search eBay for ASIC in the Computer category and you may find:
- USB Block Erupter - 333Mh/s for $50 to $75
- USB Antminer - 1.6Gh/s for $95 to $135
- Butterfly Labs - 30Gh/s for $960
- Butterfly Labs - 50Gh/s for $1900
- Avalon 2nd generation - 200Gh/s for $5800
The cost of the hardware is from $150 to $30 per Ghash/s according to how much money you are willing to throw at it.
Then you have to pay for postage and wait for delivery. Those eBay ASIC are second-hand. New ones may take up to 3 or 4 months on preorder.
Then you need some technical knowledge to set it up. (not easy)
Then you need the room and lots of cooling fans and you have to pay for the electricity to power all your hardware. (not cheap)
At CEX.io you simply purchase any amount of Ghash you can afford.
The minimum is for >=0.00000001BTC (much less than $0.01) but less than 1Ghash won't do much..
The price of Ghash vs. BTC varies all the time with the number of buyers and sellers. Actually some people like to "day-trade" their GSH
At CEX.io your purchased Ghash start mining instantly in the Bitcoin largest pool.
No need for complex setup.
You start receiving the proceeds from mining automatically when the pool finds a block (variable time - be patient)
No need for extra costs.
The hardware maintenance and power costs are included in every payment you receive and are very small.
You Own the hardware you purchased in the form of Ghash. This is an important concept to keep in mind.
It means that when you are done mining and/or want to use your Bitcoins for some other venture, it is easy to resell the Ghash and withdraw your Bitcoins.
It is easy to purchase more Ghash using your mining earnings as often as you want.
This is another important concept. It works like a form of compound interest.
Your small earnings per day will get larger and larger without any new cash injection.
But you can also follow the Bitcoin prices. Buy low and increase your Ghash and withdraw to sell High.
You have complete freedom to manage your assets.