Let's talk plainly about whether these 'mining companies' are worth long-term investment, just like discussing whether the small shop run by neighbor Wang can last long:
How do I assess whether a mining company is worth money? - Inspired by Bit Digital's profitability, and sharing with everyone.
Seeing Bit Digital (BTBT), this mining company lost 12 million dollars last year, but suddenly made 14.9 million this year! This change makes me ponder: companies that only know how to 'mine coins' may not be enough anymore; they need to have some other skills to survive long-term. If I want to invest in this type of company, I need to focus on these few aspects:
1. Can't just rely on mining for income, must know how to 'diversify' to earn money.
· Why? The price of Bitcoin is like a roller coaster; electricity prices and policies can change suddenly. Relying solely on mining, you could lose everything when the market is bad.
· What to look at? Besides mining, does this company have other revenue sources? For example:
· Helping others 'stake coins for interest' (pledge services)
· Can the mining computers be used for other tasks (for example, renting them to AI companies for data processing)?
· Providing some financial services related to digital assets (custody, trading, etc.)
· Insight from Bit Digital: Their mining income now only accounts for 60%, and the remaining 40% comes from other activities! This is much more stable.
2. Saving electricity and money is a hard truth; being frugal is essential for survival.
· Electricity costs are crucial! The biggest expense in mining is electricity. Whoever has cheap electricity can still earn a bit when others are losing money.
· What to look at?
· Where does the company mine? Places with cheap electricity (like Texas in the USA or Quebec in Canada) are treasure spots.
· Have they signed long-term cheap electricity contracts?
· Is the machine a new model that saves electricity? (Like checking fuel consumption when buying a car)
· Bit Digital's clever move: They modified some outdated, unprofitable mining machines to do AI tasks, making good use of waste!
3. Have a long-term vision, think about what else can be done in the future.
· Powerful mining companies may become more like 'basic service providers in the digital age', not just mining:
· Serving large institutions: For example, helping banks and fund companies securely custody cryptocurrencies or providing interest-bearing services.
· Renting out computing power: When the mining computers are idle, can they be rented to companies that need extensive computing (like for animation rendering or AI training)? This is called 'computing power reuse'.
· Environmental credentials are important: Now the whole world is talking about environmental protection, companies that mine using green energy (like wind and hydro power) will find it easier to attract investment and gain recognition in the future.
4. Risks need to be clear, avoid pitfalls.
· Policy changes: What if one day a country suddenly says that mining is not allowed or imposes heavy taxes; can the company withstand it?
· Deep in debt: Companies that borrow too much and expand aggressively are most likely to go bankrupt when the market is not doing well (there have been many examples in the past few years).
· Technological upheaval: (This possibility is small, but it must be considered) What if one day the way Bitcoin mining is done is radically disrupted by technological innovation?
📌 My summarized 'foolproof version' checklist.
I want to see if a mining company is reliable, so I ask these few simple questions:
1. Are there multiple ways to make money? Is the income from sources other than mining more than 30%? (Like Bit Digital, which has reached 40%, that's pretty good.)
2. Is the electricity price low enough? The average price per kilowatt-hour should ideally be below 5 cents (about 3 dimes in RMB), the lower, the better.
3. Is there enough money in the pocket? Is there enough cash on hand for the company to operate normally for more than a year? This is called 'winter grain'.
4. Is the mind active? Is there any collaboration with large institutions? Can idle computing power be rented out to make money?
💡 Ultimately, what do I value?
Bit Digital's turnaround tells me: the future valuable mining companies must be 'cost-saving experts + money-making idea kings + rule-abiding operators' in one. Just having machines running loudly is not enough; the vision and abilities of the CEO and management team are the real treasures.
Mining may gradually become a basic task; whoever can make good use of this computing power and experience, transforming into a 'resource manager of the digital world', is likely to be the one who laughs last.
In one sentence: Don't just look at how many coins it has mined; focus on whether it can steadily and diversely make money through the ups and downs of the crypto market. What do you think? Do you value its cost-saving abilities more, or its ability to innovate?
