Crypto mining essentials
Benefits, challenges and solutions
What is cryptocurrency mining?
Where do bitcoins come from? With paper money, a government decides when to print and distribute money. Bitcoin doesn’t have a central government.
Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain.
Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
Essentially every blockchain requires computation power to run its algorithm. Those who provide the required computation power is rewarded by the algorithm with newly issued coins and transaction fees.
High-yield return on investmentDepending on access to resources the production costs of bitcoins can be significant lower than the current coin value. This means a lower entry point compared to buying digital currencies on the exchange
Short time to break-evenAs computing power weakens relatively to the network over time the vast majority of the mining return is made within the first months as profitability continuously diminishes
Production costs < market priceSince successful mining means receiving coins at production costs lower than the current market value, mining is a way to get coins at lower prices than buying them on the exchange
Passive incomeDaily source of income as long as machines keep running
Opportunity to reinvest your coins to earn a yieldYou can reinvest your cryptocurrency balances and earn a high yield in a world where you can not get paid any interest on your crypto holdings
You do not need to keep the coinsMiners can exchange daily their mining proceeds into fiat currency and monetize the difference between production costs and current market price
Challenges with mining
Scalability & Diversification
What mining options are available to you?
OwnSource, ship, install, maintain & safeguard your miners yourself
Full ControlYou own everything, you do not need to trust 3rd parties
Low starting costsYou can start with only 1 miner
Operational hassleRequires your constant attention (and the noise the miners produce is a major nuisance!)
High fixed costs at scaleNeeds a whole army of experts and a full-fledged business operation, and mistakes may cost you millions
Limited access to ressourcesSourcing energy and latest mining equipment at low costs is challenging without scale
CloudLeasing computation power from miners already running
Instant startNo lead time for ordering, shipping and installation since miners are already active
Very low minimum investmentYou can only rent computation power that represents a fraction of 1 miner
Intransparent pricing and processUsers have little access to details about their mining process and if pricing is good value for money
Security riskYou depend on the integrity and professionalism of the provider
No ownershipYou do not own the mining equipment
Contractual termsUsually 12 or 24 months contract length bound to specific cryptocurrency, paid in a lump-sum upfront
3rd PartyHosting your miners with a professional service provider
Low costYou own everything, you do not need to trust 3rd parties
Low minimum purchase amountRanging from 1-10 Miners
Hardware purchaseBenefit from potential tax write-offs
Security riskMost providers use splitters to deduct service free from daily mining proceeds. Hence requires trust in the professionalism and integrity of the counterparty
Complex Pricing StructureOften different tiers of energy, rental and service fees
ComittmentsUsually 12 or 24 months contracts bound to specific cryptocurrency
Hosting with BlockBasePurchasing and hosting miners in our data center in Sweden
Very low costsBenefit from our very low energy costs, cool climate, strong legal frame work and political stability in Sweden
All-In pricing– Hardware purchases include shipping & installation
– Monthly service fee include energy, infrastructure & maintenance
Receive 100% of your coins minedFull hardware ownership, meaning:
– We never touch your coins. Your hardware mines directly into your wallet
– Benefit from potential tax write-offs
– Switch hosting provider
Hardware ownership– Benefit from potential tax write-offs
– Switch hosting provider