Mining profitability sounds too good! Where is the catch? (2017 edition) Given the staggering increase in BTC value over the last few months (nearly 600% in 12 months), I am kicking myself for not getting into the game earlier. I've been lurking around this for years but have been too risk-averse to dive in, and I haven't been paying attention lately. Now, looking into matters again, I am bound to ask: Where is the catch? 

(This has been asked before, but the information is outdated.)

A cost/income calculation with present-day numbers (Aug'17) tells me that a dedicated mining device would pay for itself in 86 days and would generate in excess of $2500 per year. That sounds like free money! 


If this is really true, then why isn't the whole world up in arms about this new gold rush? Or is it true, and most people are just living under a rock?
If this is true, then why not rush out and buy as many miners as I can afford? Or is it wiser to just buy a bunch of coins instead?  


I've tried to take into account current values of:


best hash rate (14Th/s)
difficulty (860,221,984,436) as well as the expected increase
block reward (12, halving to 6 expected in the year 2020)
BTC exchange rate (currently 4162 USD per 1 BTC)
purchase cost of miner ($1288)
cost of miner's power consumption.


Using various online calculators (coinish, blockchained) I arrive at 16.35 USD/day or 2597.50 USD/year when taking difficulty and power cost into account. This still sounds like free money; what's the catch?  

(edit: Due to a typo my initial calculation was one order of magnitude too high. These values are now corrected.)
There are many catches.

First of all, the difficulty will adjust and change as new hash power is added. That will then cause profitability to decrease. When new hash power is added to the network, the difficulty adjusts upwards to compensate for that so that blocks continue to be found at a 10 minute interval on average. This means that more work (i.e. more hash rate) is required to mine blocks and thus, given a fixed hash rate, profitability will decrease.

Also, the block reward halves every 4 or so years. That will also effect profitability.



Besides the technicalities of mining, there are also other forces in play that effect profitability. Mining hardware is kind of difficult to acquire; either you have to have millions of dollars to buy something from BitFury or buy equipment from Bitmain which can often be out of stock and unavailable.

Lastly, the price of Bitcoin has a significant effect on profitability. Only recently has Bitcoin's price been high enough to be profitable to mine in the United States (or in many other First World countries). The price of Bitcoin remains highly volatile, so investing a lot of money into mining equipment is extremely risky; the price could drop quickly within a few weeks and make mining very unprofitable.