Monkey going the crypto entrepreneurship route

This question is a duplicate of:
Monkey going the crypto entrepreneurship route 6 comments

Happy Holidays to everyone!
I quit my job a few months ago to go the entrepreneurship route. I am involved in the crypto services field. Saw a glaring opportunity back in January when one of my friends from back home came to me asking my opinion about Bitcoin. At that time, I was only vaguely familiar with Bitcoin and did not know anything behind the technology. Fast forward to February and I have read a few introductory books about blockchain. I am fascinated by the tech but still trying to understand about breaking into the market. At the time my job was that of a market analyst covering nat gas, oil and electricity. With some more research, I figure that setting up a tier 1 or tier 2 data center to host the machines might be a good start. So, I go around the country looking for cheap electricity, which is a very important part of the business. I end up in Eastern Washington but the utility doesn't seem too thrilled with any new data centers as they already have a bunch of them. So I go around North America looking for cheap electricity (sub 4.5 cents/kwh) and end up finding it. By this time, its already July and the crypto boom is in full swing. Hedge funds are rushing in from all directions to set up their own bitcoin mines. Now I don't have the money the big guys do but manage to put in a decent chunk in setting up my facility. I have about 3MW of capacity, which means I can host upto 2200 bitcoin miners in my facility. The advantage of mining vs buying and holding, is that its cheaper to mine. Its a fixed investment in hardware and the return on investment is roughly 6-9 months given the price and difficulty of the network. The life of the hardware is roughly 2 years. Currently, I host about 350 miners of my clients and just got profitable this past month.

I am trying to get additional clients that might want some bitcoin, litecoin, etc exposure in their portfolio. I was wondering, if someone can guide me how to approach the marketing aspect to smaller institutional advisors and wealth managers? Is it viable to pitch mining as an investment to wealth managers and other smaller fund managers?

 

Hi Chem_Trader, the silence is deafening, sorry about that.... Any of the threads below helpful?

  • My Story: From Trading Floor at UBS To Entrepreneur on Kickstarter path of life through entrepreneurship. The idea is that as an entrepreneur, you have a much better ... with you how I got there and provide some value along the way if going down "the other road" ... it runs away. But the moment you choose to let it go, it comes right back at you (just like a cat). ...
  • Search fund/ Entrepreneurship through acquisition Context: Career switcher (military) with a bias to return to Texas, but want to go the search ... fund/EtA route out of the MBA program. Does school matter beyond a certain point for this? I say this as ... ranking/prestige driven beyond top 25 or so. What say the monkeys? search fund ...
  • What is there to life after 30 if you don't want to go the starting a family route. a family route but I often wonder what the alternative life is like for guys who decide to go the same ... can await. One thing I know for certain is that I don't want to go the marriage and starting ... route as me. It seems like college and some parts of your 20s are all about the parties, having fun, ...
  • How to Get Started in Cryptocurrencies? General Crypto Thread Hello monkeys, as what I am sure all of you are aware of, cryptocurrencies are getting to be ... pretty popular at the current moment. However, a lot of things are confusing about it to me and I was ... wondering what you guys think are good ways to educate yourself about cryptocurrencies, the best ones to ...
  • Wall Street vs. Entrepreneurship Investment Banking is. You suddenly become infatuated with the idea of making it to Wall Street. You go out, ... entrepreneurs and IB analyst can potentially work the same amount of hours, workload isn't an issue. ... complaints. Yes, I know life is hard. It took until the end of your sophomore fall semester to find out what ...
  • Why is it bad to join a hedge fund right out of college instead going the 2 years and out route? Title is everything, I have seen countless of threads of people asking for advice to join hedge funds right out of undergrad without any IB experience but to get shut down saying its a completely bad choice. ...
  • Entrepreneur Oasis Patrick, Given the fact that there has been a hell of a lot of talk about entrepreneurship on here ... lately, but no easy site to go to that focuses solely on entrepreneurship, I was wondering whether it ... would be a good idea to have a WSO for entrepreneurs. The current platform works well, but I think you ...
  • More suggestions...

Any pros willing to rescue this discussion? mrharveyspecter Chip1321 ndwbl

Fingers crossed that one of those helps you.

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 

Chem_Trader, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:

  • My Story: From Trading Floor at UBS To Entrepreneur on Kickstarter path of life through entrepreneurship. The idea is that as an entrepreneur, you have a much better ... with you how I got there and provide some value along the way if going down "the other road" ... it runs away. But the moment you choose to let it go, it comes right back at you (just like a cat). ...
  • Search fund/ Entrepreneurship through acquisition Context: Career switcher (military) with a bias to return to Texas, but want to go the search ... fund/EtA route out of the MBA program. Does school matter beyond a certain point for this? I say this as ... ranking/prestige driven beyond top 25 or so. What say the monkeys? search fund ...
  • What is there to life after 30 if you don't want to go the starting a family route. a family route but I often wonder what the alternative life is like for guys who decide to go the same ... can await. One thing I know for certain is that I don't want to go the marriage and starting ... route as me. It seems like college and some parts of your 20s are all about the parties, having fun, ...
  • How to Get Started in Cryptocurrencies? General Crypto Thread Hello monkeys, as what I am sure all of you are aware of, cryptocurrencies are getting to be ... pretty popular at the current moment. However, a lot of things are confusing about it to me and I was ... wondering what you guys think are good ways to educate yourself about cryptocurrencies, the best ones to ...
  • Wall Street vs. Entrepreneurship Investment Banking is. You suddenly become infatuated with the idea of making it to Wall Street. You go out, ... entrepreneurs and IB analyst can potentially work the same amount of hours, workload isn't an issue. ... complaints. Yes, I know life is hard. It took until the end of your sophomore fall semester to find out what ...
  • Why is it bad to join a hedge fund right out of college instead going the 2 years and out route? Title is everything, I have seen countless of threads of people asking for advice to join hedge funds right out of undergrad without any IB experience but to get shut down saying its a completely bad choice. ...
  • Entrepreneur Oasis Patrick, Given the fact that there has been a hell of a lot of talk about entrepreneurship on here ... lately, but no easy site to go to that focuses solely on entrepreneurship, I was wondering whether it ... would be a good idea to have a WSO for entrepreneurs. The current platform works well, but I think you ...
  • More suggestions...

No promises, but thought I'd mention a few relevant users that work in the industry: tandrew km190 JedBarlet

Fingers crossed that one of those helps you.

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 
Best Response

I'll give you my thoughts.

*Its a fixed investment in hardware and the return on investment is roughly 6-9 months given the price and difficulty of the network. *

This right here is exactly the root of your problem. While your strategy and implementation appear sound to you right now, you are exposing yourself to an incredible amount of risk and not really discussing that aspect of the venture. Let's say the US gov't is suddenly not okay with BTC being an easy route for overseas money laundering and decides to implement some steadfast regulations. The price of BTC falls back down to $2000 and the currencies transaction rate begins falling sharply, what is your Pbp then? 14months? 3 years? While you currently are becoming profitable, who's to say overseas mining facilities with less intrusive governments won't flood the hosting market and begin eating up your ROI as word gets out about the easy money available?

I'm not saying your current proposal is indefensible. My point is that it seems like you have looked entirely at the upside and forgotten you're making a large bet on a speculative currency yet treating it more like an asset-backed investment. Bitcoin is profitable to mine currently and this makes hosting it profitable as well; if that changes however because of any of the risks stated above you will be left with a large fixed investment that you have to liquify.

 

My take on the downside is that folks investing in hardware aren't in it just to make a quick buck for the short term but have staying power for the longer term should prices decline very quickly. Lets say the ROI goes up to 3 years suddenly due to price declines and the machine only makes a fifth of what it was making. It would be better to have some coins mined everyday rather than booking your losses as would be the case for someone just holding the coins. Sort of a way to expose to a riskier investment but with more limited downside. Thoughts BurtonMalk?

 

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