Meanwhile, I have been active in the crypto industry for over 10 years, and one aspect of Bitcoin that has always fascinated me is mining. Bitcoin mining is the backbone of the network, where machines solve complex calculations in search of new Bitcoins. Bitcoin mining is the process of creating new bitcoins and verifying transactions on the Bitcoin network. At the end of the article, you will find more technical explanations about mining, but I don’t want to bore everyone with that.
During my crypto career, mining has come across my path several times as an option to invest in or get more involved with. However, it never became concrete due to significant drawbacks such as:
- Expensive electricity.
- Noise and heat.
- High investment costs, as there is more to it than just miners.
- Maintenance and equipment monitoring.
Afterward, I explored the phenomenon of cloud mining, but in 70% of cases, it’s a scam, and in the other 30% of cases, it’s too expensive and not profitable. These companies are also not resilient during a bear market because they finance mining machines themselves and rent out hashrate (computational power). They buy machines with the risk of a Bitcoin price drop and don’t earn enough during a bear market.
Explanation of Cloud mining:
Cloud mining is a service where individuals rent computing power from companies to mine cryptocurrencies on their behalf. They don’t need to own or manage the hardware themselves. The cloud mining provider handles the mining operations and distributes rewards to participants based on their rented computing power. It’s a way for people to mine cryptocurrencies without the need for expensive equipment or technical expertise.
When that option was ruled out, there were fewer and fewer mining options left. But in reality, I also want to do something with it through the crypto guide. Recently, through an acquaintance, I met someone who offers the solution I was looking for. That person is Mitchell Weijerman from Epic Mining. He offers the opportunity to purchase mining equipment through Epic Mining, which you buy in bulk with him and other customers at a favorable rate. Through Epic Mining, you buy a Bitcoin miner that is shipped to you, and within 6-8 weeks, it starts mining for you with an electricity rate of 5.5 cents, including hosting, security, and maintenance (even more).
You receive a monthly invoice with this 0.052 Euro (0.055 USD) per KWH based on what your mining equipment has consumed. This can also be done quarterly, semi-annually, or annually. However, your profits are paid out daily, and you can accumulate Bitcoin and pay the costs later and, in the best-case scenario, pay with fiat money (credit card) or another method and leave the Bitcoin untouched. This way, you can accumulate Bitcoin inexpensively for when the price ‘explodes,’ which traditionally happens 7 months after a halving. This can be a mega-interesting earning model if you believe in price increases. Mitchell came up with the nice quote, “Buy low, mine high.” This refers to buying machines at a low cost, keeping the costs as low as possible, and maximizing profits during a bull market.
BlackRock and Bitcoin Mining: A Sustainable Combination?
BlackRock, the world’s largest asset manager, has recently announced that it is adding Bitcoin mining to its portfolio. Why has BlackRock made this decision, and what are the benefits of this strategy?
BlackRock sees Bitcoin mining as a good investment for several reasons. First, BlackRock believes in the future of Bitcoin as an alternative to traditional currencies and as a hedge against inflation. By investing in Bitcoin mining, BlackRock can increase its exposure to the crypto market and profit from the rising demand for Bitcoins.
Second, BlackRock sees Bitcoin mining as an opportunity to become more sustainable. BlackRock has committed to reducing its ecological footprint and supporting the transition to a low-carbon economy. Bitcoin mining can contribute to this by using renewable energy sources such as solar energy, wind energy, or hydropower. BlackRock can thus reduce its electricity costs while simultaneously contributing to the reduction of CO2 emissions.
Therefore, BlackRock has discovered that Bitcoin mining is a good investment, both financially and ecologically. Bitcoin mining allows BlackRock to benefit from the growing crypto market and achieve its sustainability goals. BlackRock is a major shareholder in 4 of the 5 largest Bitcoin mining companies.
How Does Epic Mining Achieve Such “Super-Low” Rates?
By mining in favorable areas abroad near various hydro dams for cheap and green energy. In addition, they are situated in a mining facility where over 80,000 devices are located, which is about 5% of the total global mining. This results in extremely low rates due to the joint procurement of all facilities with other mining farms.
Benefits of Mining via Epic Mining:
- No noise or heat.
- Low energy rates.
- Purchasing only Bitcoin miners.
- No maintenance.
- No headaches.
- Everything is taken care of for you. All you have to do is watch your wealth grow and pay the electricity bill once every 1, 3, or 6 months.
Why Mine Instead of Buying Bitcoin?
You should see it like this: With Bitcoin mining, you can produce Bitcoin below the production cost. The higher the price of Bitcoin becomes, the more profit you can realize because your production costs are below the market value. So, if you believe that Bitcoin will reach 100k or 200k in the next 2, 3, 4 years, then Bitcoin mining becomes exponentially more interesting than buying Bitcoin. As the price of Bitcoin rises, the costs to buy it also increase. Meanwhile, with mining, you can produce them below the market price. That’s the game that’s played with mining.
What Is the Bitcoin Price Based On?
Factors that increase demand for Bitcoin:
- The failure of the traditional financial system.
- There is more and better education available.
- Network effects.
- Bitcoin is the best-performing asset of the decade/ever.
- Countries are buying Bitcoin.
- Companies are adding Bitcoin to their treasuries.
- Large investment funds are buying Bitcoin.
Factors that make Bitcoin scarcer:
- The new supply of Bitcoin is halved every four years (halvings).
- Holders are not selling but buying.
- Large mining companies have better access to financing, so they no longer need to sell their BTC to fund their operations.
As demand increases and supply becomes scarcer, this can mean only one thing in my opinion. In my opinion, it can only mean one thing: the price will rise!
What traditionally happens after a halving?
- After the market crashed in 2010, the price of Bitcoin skyrocketed by 11,645%.
- After the market crashed in 2014, the price of Bitcoin increased by 7,382%.
- After the market crashed in 2017, the price of Bitcoin rose by 1,991%.
Earnings Calculation Example:
Of course, we all want to know what it can ultimately yield. These are examples based on the Bitcoin price. The total profit is per machine after 4 years, taking the halving into account. If Bitcoin reaches 100k within 4 years, you are looking at a return of 23k USD per machine. I understand that this overview may raise some questions, and all of this will be explained in the next webinar at the 25th of oct.
Do you want to know all the ins and outs of the man behind EPIC Mining?
Check out this the preview of the personal interview I did with him:
In-depth explanation of Bitcoin mining.
Bitcoin mining is the process of creating new bitcoins and verifying transactions on the Bitcoin network. It is a crucial part of the cryptocurrency’s infrastructure.
Bitcoin operates on a decentralized network, meaning there is no central authority controlling the currency. Instead, transactions are verified by a network of computers (nodes) spread across the world. Miners are participants in this network who use specialized hardware and software to solve complex mathematical problems and validate transactions.
Here is a simplified explanation of the mining process:
- Transaction Verification: When someone initiates a Bitcoin transaction, it is broadcast to the network. Miners collect these transactions into blocks.
- Hashing: Miners compete to solve a mathematical puzzle known as a cryptographic hashing function by repeatedly guessing a specific value (nonce) until the desired outcome is achieved. The hashing process converts the block of transactions into a unique string called a hash. The computational power of miners plays a role in increasing their chances of finding the correct nonce and solving the puzzle.
- Proof of Work: The successful miner who solves the puzzle broadcasts the newly mined block to the network. Other miners then verify the validity of the block and its transactions.
- Block Addition: Once the block is verified, it is added to the existing blockchain, creating a permanent and immutable record of transactions. Miners receive a reward for their work in the form of newly minted bitcoins and transaction fees from the transactions in the block.
It’s important to note that the mining process becomes progressively more challenging over time due to the design of the Bitcoin network, which adjusts the difficulty of the mathematical puzzle to ensure that new blocks are added approximately every 10 minutes, regardless of the total computing power of the network.
Bitcoin mining requires significant computing power and electricity. Therefore, specialized hardware called ASICs (Application-Specific Integrated Circuits) is often used to mine bitcoins efficiently. Additionally, mining farms with numerous ASICs are often set up in locations with cheap electricity to maximize profitability.
Overall, Bitcoin mining plays a vital role in securing the Bitcoin network, verifying transactions, and introducing new bitcoins into circulation.
Bitcoin mining is divided among various companies that manage mining pools, which are groups of miners who share their computing power and distribute rewards.
- Foundry USA: Based in the United States, with 30% of the network’s hash rate. Foundry USA is a subsidiary of Foundry Digital, a company that provides equipment financing and advisory services for mining to institutional investors and enterprises.
- Antpool: Based in China, with 23% of the network’s hash rate. Antpool is owned by Bitmain, one of the largest manufacturers of Bitcoin mining hardware and chips.
- F2Pool: Also based in China, with 18% of the network’s hash rate. F2Pool is one of the oldest Bitcoin mining pools, established in 2013.
- Poolin: Another Chinese pool, with 12% of the network’s hash rate. Poolin was founded in 2017 by former Bitmain employees.
- Slush Pool: Based in the Czech Republic, with 7% of the network’s hash rate. Slush Pool is the first Bitcoin mining pool, launched in 2010.
These five pools account for approximately 90% of the total Bitcoin mining power, meaning they have a significant influence on the security and decentralization of the network.
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