Crypto Mining

Crypto Mining - Seizing tomorrow's opportunities today

Stefan Hochradl
September 18, 2019

THE BLOCKCHAIN INDUSTRY

The increasing use of cryptocurrencies will result in much higher volumes of safe transactions and even data due to industrial automation, the Internet of Things and artificial intelligence. This situation is going to have a huge influence on the mining industry, creating lots of opportunities for both miners and their customers.

THE CASE FOR BITCOIN

Although there will be lots of new company coins in the near future, Bitcoin is still the leading crypto currency among the market.

Bitcoin has the advantage of a strictly limited number of coins, which leads to an automatic price increase as soon as the usage is rising further.

If we take a look at the price development of Bitcoin, it is clearly visible, that the last correction followed the pattern of previous corrections. There is a high probability that the next bull market phase is waiting just around the corner. Looking at that situation from a long-term perspective, no correction can break the upward trend.

CRYPTO MINING

As a matter of fact, some cryptocurrencies work without mining. Others (e.g. Ethereum) plan to reduce or replace proof of work confirmation.

Still, Bitcoin, being the leading coin, is completely based on mining. Thereby it is also the safest crypto currency.

Mining returns can be very volatile as price levels of crypto currencies fluctuate over time. This is especially true when electricity costs are high at certain facilities.

However, when the newest machines are bought at an early stage within that cycle and at reasonable prices, these miners not only produce high returns of 10% a month and more, but also generate returns in Bitcoin, having the potential to rise multiplicatively with increasing market price. Ultimately, the ROI can be reduced to only 6-8 months.

The following chart shows that older types of miners (e.g. Antminer S9i) can work very profitable even during market corrections.

MINING DIFFICULTY VS HARDWARE PRICE

The difficulty rises with the number of miners that are online world-wide. The hardware price rises and falls together with the demand for miners, thus with the price of Bitcoin.

Returns can be low preliminarily, which immediately changes by hindsight, when the returns are kept in Bitcoin and their value in USD rises, as it is the case right now with Bitcoin price already being tripled again.

The effect of difficulty on gross returns

At times when Bitcoin price rose sharply (Jan. 2017 – Jan. 2018), the selling of new miners lagged behind. Difficulty rose less and returns got higher.

Only when the elevation of the difficulty level coincides with a drop in Bitcoin price, the returns decrease as well, as it was the case between April and October 2018.

When a certain minimum return was reached, many miners with high electricity costs were forced to switch off their equipment, resulting in lower difficulty and returns not dropping any more (Oct. 2018 – Jan. 2019).

The graph below shows difficulty levels over the last year.

When the market price for Bitcoin recovered from its low, even in the initial stage returns doubled (Jan. 2019 – April 2019) with the potential for much more to come.

The effect of new equipment

Although the returns of older miners also become attractive in a new upward cycle, technical developments provide an even greater opportunity for early investors.

DECISIVE FACTORS

Timing

Mining is a cyclical business. It is important to buy new machinery in the early stages of a new cycle to ensure high returns throughout the cycle. Towards the end of the cycle mined coins should be partly changed into fiat currency.

Machinery

When next steps in technical development are close, it can be beneficial to reduce the acquisition of miners for 2 to 3 months, to avoid buying too much equipment not being state of the art any more. However, you should not be too conservative to buy to not miss early opportunities.

Bitcoin price

A rising Bitcoin price usually increases the returns drastically.

Mining difficulty

The difficulty indicates how much new mining capacity is being installed. It usually develops in parallel to the Bitcoin price but can change towards the end of a cycle.

Hardware price

Beware of steeply rising prices which can be a sign that too many machines are being bought.

Electricity price

As the electricity price is the main constant cost, cheap electricity is vital for constantly achieving high returns.

WACHSENDE WERTE LTD

Wachsende Werte (WW) is committed to become the best in mining. We strive to grow values for our partners by seizing the manifold opportunities of the fast developing blockchain market.

WW was established in 2016, selling and installing mining equipment by

using the expertise of different experts and building up its own know how. Since then, we not only focus on the development of FPGA mining and our own bitstreams, but also do lots of research in cooperation with universities and hardware companies to assure the best mining performance for our customers.

Recently, we started a subsidiary in Montenegro in order to develop our

own exchange and payment system. Those services are made accessible to the fast growing south European market.

To maintain the market pace we are currently developing a data mining concept to even broaden the mining offer for our customers. Besides that, we also plan to start another subsidiary in Switzerland for further enlargement of our business.

BUSINESS FOCUS

WW benefits from the experience of one among very few mining companies that survived the intermediate crash in Bitcoin price and succeeded to restructure and advance in a very difficult mining environment.

We permanently evaluate the market, the mining industry and new business opportunities within the crypto world. On top, we have a special focus on cost-effective research and development.

WW runs it’s equipment at one of the lowest costs of electricity among the market and can provide superior returns on investment.

WW'S USP

  • At present, we can mine at 4.9 Euro-Cents / kwh including all additional costs (rent, insurance, surveillance, etc.).
  • A high percentage of our competitors have electricity costs of 6 Euro-Cents / kwh and higher on top of all additional costs. Many of them even had to file for bankruptcy and will not be able to reactivate mining even now that the Bitcoin price is going up again.
  • WW profits from buying miners at much cheaper prices. With the rising prices of cryptocurrencies, these miners are going to be hugely profitable.
  • Through our joint venture in Montenegro we participate in the development of our own exchange platform and in the roll-out of a POS-network.
  • Through partnering with HTC GmbH we participate in future developments being highly promising:
    • The perfection of liquid cooling for FPGA-miners, being space-saving and efficient, enabling FPGA-cards to be operated at low temperatures and thereby enlarging their life span.
    • The development of a completely new type of FPGA-card with the capacity of more than 100 times the capacity of present cards.
    • The use of FPGA-cards not only for Crypto-mining, but also within newly assembled data-farms for the huge future need of computing power for AI and other applications.
  • For the best use of FPGA-cards dedicated to crypto-mining, we are negotiating with a team of technicians in Montenegro to develop our own exclusive bitstreams for specific coins.

WW BUSINESS FORECAST 2019-2021

STEPS TO LAUNCH YOUR MINER

For further information, please get in contact with

Stefan Hochradl

Head of Sales Management Switzerland, Principal Customer Consultant

Wachsende Werte Ltd. | Fusterli 1 | 6044 Udligenswil www.wachsendewerte.at | s.hochradl@wachsendewerte.at | M: +41 78 710 12 73

Crypto
Mining
Bitcoin
Stefan Hochradl
Head of Sales Management Switzerland, Principal Customer Consultant
Wachsende Werte GmbH & Co KG
Engineer | Project Manager | blockchain enthusiast | OTC trading

More news

Start a project

We are ready for the challenge

info@cryptoworldzug.io

Say hello

Office Lab
Postplaz 1, 6300 Zug
Switzerland

Jobs

We are always looking for talent

info@cryptoworldzug.io

Creative Dock
Developed by Creative Dock