You Can Still Get Bitcoin for $50K??? 7 – Mining Risks?

Continuing from the last post, let’s talk about mining risks. Let me say this three times for emphasis: Mining is operation, operation, operation — not investment! If you’ve never managed operations, you might think it’s no big deal (which is why so many private equity funds confidently buy real businesses and then crash and burn — like what happened to The Bay, ruined by private equity 😂). But if you’ve ever done operations, you know how huge the difference between success and failure can be! Mining operations involve many aspects, so let’s break them down one by one:

Electricity:
Electricity is the biggest part of mining costs, and it’s a monthly expense that can fluctuate. Ideally, you want a large, stable, and fixed electricity cost.

B said he chose to locate his mining farm next to a big hydroelectric dam in Oregon, with fixed monthly electricity fees. This ensures steady power and reduces a lot of uncertainty. Also, they have multiple farms and can redirect power between them, allowing flexible control of electricity and costs to keep things stable long term. That’s how they can offer fixed electricity pricing for now. 

Price Volatility:
No need to say much — if you calculate returns in fiat currency, it’s like Schrödinger’s cat: you just can’t be sure 😂 Some use futures and derivatives to hedge. For me, being “BTC-denominated,” I don’t care about price swings, just the number of BTC mined. B mentioned that some miners hedge with derivatives — like locking in electricity prices upfront in exchange for pre-selling some Bitcoin.

Insurance:
If you have many rigs, how do you ensure the machines run properly? How about transport safety?
B said insurance exists, but mostly only large miners with hundreds of machines buy it because it’s worth the premium. Small setups usually don’t insure because it’s not cost-effective. Theoretically, everyone should, but in practice only a few actually do 😂

Climate:
Mining rigs need good cooling. Local climate and geography have a big impact on machine lifespan — mining for 3 years versus 6 years makes a huge difference 😂
B said this relates back to the first point about location.

Policy Changes:
The legal status of cryptocurrencies is like Schrödinger’s cat too — uncertain. But it seems the situation is certainly improving.

Mining Pool Risks:
What if a centralized mining pool runs away with your rewards?
B said miners can choose payout intervals (weekly, monthly, etc.). If a pool runs off, you only lose one payout cycle’s rewards (like a week or a month), so it’s usually not a lot. Decentralized pools are even better.

Third Party Risks:
What if the mining manager holding your rigs runs off? Your machines are money, after all, and hosting means trusting others with your gear.I know a friend who invested in 8 farms said 7 ended with total loss 🤦🏻‍♀️ — either poor maintenance and no mining or just straight up abandoned. So this risk is very real.

B laughed and said they are also mining themselves in the same facility. It’s a matter of trust and time proving it. He said, “You might not believe we won’t run away at first, so start small.” Their biggest client (hundreds of rigs, generating 7-figure passive income yearly assuming $100k per coin) also started small, and only increased after seeing good maintenance and services as time passes. 

This feels honest and aligns with my own “start small, if it runs off, it runs off” principle 😂 Only time can tell.

Environmental Risks:
Mining uses a lot of electricity and sounds bad for the environment, right?
B said, surprisingly, crypto mining is one of the largest global consumers of renewable energy. Over 50% of mining power comes from renewables, and they use less electricity than traditional banking systems!

Summary:
B and his team focus heavily on operations — after all, they’re doing it for themselves and their families. I can feel that: the whole process is smooth, everyone knows their roles clearly. The crypto world might be the only asset class where I learn more from much younger people than I can teach them. Other asset classes tie experience closely to results, but crypto is something only hands-on young folks fully get. Plus, they’re all true, passionate decentralization advocates. If I were dealing with older generations, I’d probably be skeptical 😂

Now that we’ve gone through the risk factors, the big question is: Should you buy or mine? Next time I’ll share my own thoughts.