Everyone can mine bitcoin. And gradually, more and more people are realizing that and becoming miners through Compass. This livestream talks about the decision that three traders and investors made to allocate capital to bitcoin mining through Compass.
For anyone who isn't deeply immersed in the new and data of bitcoin mining, this livestream offers essential perspectives on how and why bitcoin mining was an attractive investment for these individuals.
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- Lyn Alden: Founder, Lyn Alden Investment Strategy. She provides equity and macro research. She started going deep down the bitcoin rabbit role in 2020.
- Scott Melker: Trader; he started trading in the 1980s. He found bitcoin in 2016, but previously passed on bitcoin for one of his DJ gigs in 2011.
- Crypto Cactus: Trader, started investing and trading in cryptocurrency in 2018.
Why did you want to start mining bitcoin? (timestamp)
- Cactus: determined that mining has a better ROI than yield farming
- Lyn: Started covering mining in 2017. She wanted to mine to capture economies of scale without having to DIY and decided to get in when the hashrate dropped.
- Scott: wanted mining income without dealing with technicalities and decided to mine with Compass. He entered the mining market after the Chinese crackdown after the price of ASICs dropped
- Bitcoin’s 28% downward difficulty adjustment was a great time to get into mining
Do you actively follow mining news? (timestamp)
- Scott: I track the news aggressively and see securing the network as a secondary benefit to mining. Actively mining means buying more machines.
- Lyn: I don’t focus on my miners. I just watch them pay sats. I focus on the broader bitcoin mining ecosystem. My clients want to know about the environmental impacts of their investments, so I research energy consumption.
- Cactus: This is an experiment for me, you have to try something to see what it’s like. For me it is a risk off trade, I don’t hold bitcoin.
- Mining is Dollar Cost Averaging (DCA) into bitcoin and passive income
Will you try to time the market? Or will you mine long term regardless? (timestamp)
- Scott: I see this as a long term investment. I got a great entry during the market crash in May
- Lyn: I don’t see it as a trade, my mining is DCA and I got in at a great price. I will possibly sell when the miner is no longer economic
- Cactus: Mining isn't a trade, I won’t sell my ASICs. I plan to add to what I have
Would you mine through a bear market? (timestamp)
- Mining is important, it helps strengthen the network and decentralize the hash rate
- Focusing on the pricing details on the ASIC market is not something any guests are interested in
- Getting deep into ASICs and timing the market is impossible unless you’re an expert in the field.
Some traders won't mine because they'd rather keep money in the market. (timestamp)
- Cactus: It depends on how much liquidity you are using in the market. I allocate 30-40% of my capital for trades, the rest is in stablecoins, bank or for yield farming.
- Scott: I don’t think anyone should have 100% of their capital in trading. 15% trades, 15% cash, and 70% long term is my allocation. These ASICS are part of that 70% allocation.
- Lyn: I put mining in my illiquid bucket, like real estate. I like seeking out illiquid investments with a good risk return profile, like mining.
Are we in a bitcoin supercycle? (timestamp)
- Lyn: This looks like a normal cycle.
- Financing for miners has improved, cost of capital has dropped, making it easier to hold on to miners.
- The impact of 4-year halving cycles will decrease as we get closer to the supercycle
- Scott: bitcoin price is expected to continue increasing. I will continue mining through the bear market and hold on to miners to support the network
Comparing ways to make money in crypto besides mining (timestamp)
- Compass facilities the selling of machines very easily, there is always a market for buying ASICs
- Mining is the best ROI for passive income right now
- Only needing 11 months to 100% ROI makes mining low risk
- Mining is low time preference. It is not a short-term trade vs these other methods
What would make you stop mining? (timestamp)
- Scott: if the network proves unsecure or if my thesis regarding bitcoin is violated then I would stop mining
- Lyn and Cactus: doomsday scenario is that hosting facilities shutdown
- Miners can hedge regulation risks by having machines in different countries, same way as you would use different wallets for your bitcoin
Would you consider mining at home? (timestamp)
- Lyn: That depends on your set up and location. Mining in my situation would be a stretch, I prefer hosting
- Scott: I prefer hosting with compass, having maintenance included, and cheaper electricity