I'm getting ready to buy some miners and get them hosted with some pretty decent electricity costs. However, as I drift into this world I realize... Holy fuck, the mining business is a crap shoot where timing is EXTREMELY important.
Let me explain. So let's say you pay 20 mil sats for miners. Then you need to pay X sats for monthly electricity. Now halving. Now bitcoin price goes up, and in DOLLAR terms, you pay off the miners. Here's the question, did you actually recoup the original amount in BITCOIN terms??? EEK!? Scary question for someone denominating in bitcoin.
Reasons to mine: (Credit to Wilson bros for some of the ideas on this list)
- Getting bitcoin below spot price (sometimes. see factors below)
- Good source of KYC-free sats (if you don't dox yourself to the host)
- Idealogical reasons: Securing the system
- As a hobby (less relevant for people hosting)
Factors to consider: (Credit to Jon from Pleb Miner Mafia for a few of these factors)
- Future change in bitcoin subsidy (aka the halving)
- Hash price
- Hash value
- Efficiency of miners you bought
- Cost of miners you bought
- Tx fees
- Difficulty adjustments
- Value of bitcoin in dollar denominated terms (if you're planning to make a dollar denominated profit)
- Opportunity cost of the bitcoin you're selling today for the miners in exchange for a trickling of sats over a longer time frame.
I posted this not to educate but to ask. Feel free to comment below. Would you mine? Yes/No? Why or Why not? And when is the optimal time to jump in (is there one?)
Not paid to advertise this obviously, but they deserve some love, so check out https://wilson.mining.io to meet the amazing brothers hosting this small hosting farm (no really, it's on an actual farm).