A Beginner's Guide on How to Invest in Bitcoin Mining

                             Source: Bitcoin mining 2023 council

Avoid Scams and Get BTC Rewards After 24 Hours Without Expertise and Huge Capital

Index

1. Introduction
2. Why NOW the best time to invest in bitcoin mining
3. How to invest in bitcoin mining without being a miner
4. How to select a reputable miner: risk assessment and metrics
5. How to select the right mining investment product
6. Conclusion

1. Introduction

Bitcoin mining and investing in Bitcoin mining are greatly misunderstood. This article aims to explore the best practices to invest securely and quickly in Bitcoin mining that does not imply huge capital investment and mining expertise.

Trust Dr. Adam Back who invented Hashcash (a type of proof of work used in the bitcoin mining process), the protocol followed by miners to mine bitcoin, about: bitcoin price appreciation, and mining bitcoin favorable conditions on Youtube:

https://www.youtube.com/watch?v=ec7aFp2PgqE

Before starting, these are not investment advice. Everyone should do her/his research and make decisions based on specific, personal, or business conditions, goals, and interests.

2. Why NOW Is the Best Time to Invest in Bitcoin Mining

There is a combination of several factors and market conditions that make this specific time particularly favorable to invest in Bitcoin mining.

• Miners’ price (hardware) hit an all-time low, depreciating the Bitcoin ASIC (hardware) price down to 90%. See below the Bitcoin ASIC Price Index from 2019 to 2023. The bear market is the best time to buy ASICs

  
  

The approval of the spot ETF will allow big institutions to invest in Bitcoin, creating a spike in demand.

• Bitcoin halving in April 2024 will cut the bitcoin reward in half, from 6,25 Bitcoin to 3,125 BTC, decreasing the supply of the already deflationary asset, with a total supply limited to 21 Million.

• Following China’s miners ban, the hash rate hit ~100 EH/s. It took over 2 years for the hash rate to increase by 4x to 400+ EH/s. Following the approval of the spot ETF, Bitcoin price can increase much faster than the hash rate. The inability of the hash rate to grow at the same pace as the price creates an opportunity for incumbent Bitcoin miners to make enormous profits.

• New Generation Mining Hardware associated with Low-Cost Electricity provides the opportunity to significantly outperform a simple buy-and-hold investment strategy.

• There is less technological advancement risk to new mining hardware purchases becoming obsolete. Moreover, growing barriers to entry which should protect future profitability returns.

  
  

• Last but not least: historically, Crypto Bull runs have been strongly correlated with the Bitcoin Halving event, which will occur in April 2024. The bull run is expected to start around 6 months after the halving, giving plenty of time to accumulate BTC yield from bitcoin mining.

Now is the best time to consider investing in site development, hosting turn-key, bitcoin miner machines, or simply hashing power.

3. How to Invest in Bitcoin Mining Without Being a Professional Miner

Mining is capital-intensive; if not, profitable data centers need to be turned down. It requires specialized labor, scouting of a proper site, finding low-cost energy (60/70% of the costs come from energy consumption), the ability to optimize data center operations (OPEX), and the ability to select the most profitable miners/hardware (CAPEX).

Throughout the years, the hash rate (the computational power needed to solve the puzzle and find the next block) reached an all-time high, which combined with the entrance into the market of several new miners, led to higher difficulty in mining a block.

Although mining can be highly profitable, it is a high entry-barrier type of industry, still blurry because it is a nascent industry, in the process of being 100% regulated, quite controversial due to the lack of transparency, and extremely misunderstood, especially for the lack of contextualization in regards of energy consumption.

One of the misconceptions about investing in mining is that if you don’t plug in, and manage your rig (miners or hardware) yourself, then it is a scam. In reality, there are several ways to mine Bitcoin without going through the complexity, and capital, required to mine. Below, I walked through the process of:

a) Selecting a reputable miner

b) Selecting the right investment product

4. How to Select a Reputable Miner: Risk Assessment and Metrics

What are the criteria that make a mining company reputable, and its business stable, despite the cyclic challenges of this industry?

• The biggest mining companies are public. The reason why mining companies go public is because they can tap into funds much easier than others, so that they can expand and survive, in difficult times, usually cyclic.
  

• Numbers of years in the business. Mining is a new industry. Seven years in the business is the equivalent of decades in other industries. Being in the mining business for so long means that the company has been able to overcome many market ups and downs, which is a sign that it might be able to overcome others, even in the future.

  
  

  It also means that it is profitable and has been able to select the right source of energy, data center site, the right people, and manage the operations effectively.

• Vertically integrated: companies vertically integrated have more control over their operations and supply chain because everything is developed internally and not outsourced to 3rd parties. This potentially leads to increased efficiency and profitability. Usually, vertically integrated miners have built data centers, operations, hardware, and software in-house.

• Mining companies’ main metrics to look after: the number of data centers under management, hash rate owned, number of miners, electricity cost, the power capacity of each data center, and data centre geography differentiation.

• Geographical diversification: having sites in different regions of the world makes them more resilient to unpredictable regulatory hurdles and political instability.

• Owning the mining pool: due to the increase in hash rate and number of miners, the difficulty of finding the next block continues to grow. For cash flow purposes, many miners share their computing power, the hash rate, in mining pools, so that they can increase the chance to win the block, although lowering the bitcoin rewards.

  
  

  Owning the mining pool reduces the counterparty risk in case something happens since mining pools are a point of centralization in the distribution of the Bitcoin rewards.

• Be a member of Bitcoin Mining Council— Being a member of the council provides transparency and legitimacy to the mining organizations since it is the most reputable BTC mining association in the world (Microstrategy, Marathon, Riot, etc.), which independently audits its members that have to have at least 500 Ph of mining power.
  
• Transparency in retrieving public information: team members, data center locations, services provided, social media presence, and all the data above already listed. The level of transparency comes with the degree of regulatory compliance.

Although there are no metrics set in stone to deduct miners' trustworthiness, these criteria could be used as a foundation for due diligence and personal risk management assessment.

5. How to Select the Right Mining Investment Product

Depending on the order of magnitude of the investment, bitcoin mining goes from site development to hosting turn key, to buying miners, or just hash rate trading that can be done through an OTC, hash rate contracts, or tokenization.

If you don’t want, or can’t mine yourself, several solutions allow you to earn bitcoin. Some solutions are plus, or menus transparent, so here, I wanted to list the criteria for selecting the most trustworthy, at least when it comes to buying the commodity itself: the hash rate.

1. You want to see the rewards coming into your wallet the day after and not wait for the miners to be shipped to the data center and then set up.

2. You want to be able to trace the daily reward from the mining pool to your wallet using a blockchain explorer.

3. You want to be able to try it for free before, to see how it works, how to monitor the reward daily, and how the electricity and maintenance bills work.

   
   

4. You want to have a simulator to calculate the potential earnings projection based on bitcoin value, energy costs, years of investment, and other metrics. If in doubt, you can use different simulators to compare the outcome.

   
   

5. You want to know how the rewards are calculated, for example, using this table.

6. You want it to be easy to sell back the hash rate to the marketplace (many second markets take place on Telegram) or update the old one.

7. Some platforms sell hash rates as contracts NDF non-deliverable forward for a limited period like 120 days. Others are only open to accredited investors requesting a threshold, and a lock-in period of 36 months.

8. Mining companies stocks: although when investing in mining companies you might see the stock value go up, it is not a promise of getting part of the daily mining rewards as the stocks’ owners don’t have the control of company’s opex and future investments, future dividend payments, and mining stock performance.

6. CONCLUSION

1. Trust no one, test and verify by yourself. Mine for free, and see daily rewards coming into your wallet.

   
   

2. You can monitor where BTC rewards are coming daily, from the mining pool, into your wallet, with a blockchain explorer.

   
   

3. After seeing how it works and how to verify the daily BTC rewards, check if there is a threshold and a minimum lock-in period. Eventually, decide if you would like to become a digital miner buying hashing power. The higher the amount of hashing power and the longer the investment period, the higher the Bitcoin rewards you will get.

Starting from a +10k investment, I can walk you through the process if you want to start mining Bitcoin quickly and securely and getting Bitcoin rewards after 24hrs; feel free to get in touch.

Linktree: linktr.ee/lauraspinaci_da

Linkedin: /in/lauraspinaci;

X: @lallispinaci