Dec 19, 2021 • 10M

Ep 41. Winter is coming?!❄️

ROI from Bitcoin Mining with Compass. Crypto for Christmas?

 
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Some say Crypto is a scam. Others swear it's a breakthrough technology. But which is it? Join us, as we explore Crypto in real life (IRL).
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My wife and I typically do a quick getaway at the end of the year. It’s nice to ring in the new year in a new city but we also invest time to review our goals and set new ones. We hit all the big ones: relationship, fitness, financial goals and more.

This year, crypto has become a bigger share of our portfolio. We ramped up our investments and fortunately those investments have done well in the crypto bull run. We continue to think through how best to play in the space.

Six months ago, my brother-in-law and I started experimenting with bitcoin mining. I shared about it in April. Today, we will dive into the ROI of our bitcoin mining experiment and then address exciting developments in the cryptoverse.


REVIEW: Bitcoin mining with Compass🚀🚀🚀

TLDR: We earned 60% ROI on bitcoin mining versus 29% if we just bought bitcoin

Background

Compass Mining offers a white glove service for regular folks looking to get into bitcoin mining. We purchased a miner (high powered computer) and had it installed at a facility in Nebraska. It took about a month for the miner to be delivered from China. We chose to host the machine at an industrial site instead of our home because they have access to much lower electricity rates.

We recently sold the miner to upgrade to a more powerful model. Felt like a good time to assess if the ROI of mining bitcoin was better than buying and holding bitcoin.

Numbers

Case A: Bitcoin mining 💻

Costs: The miner cost $9,800 upfront and we paid $150 a month in hosting fees. Overall, it cost us $10,700 over the 6 months the miner was in operation.

Revenue: We sold the miner for $12,469. Yes, you read that right. We sold the miner for more money than we bought it. We benefitted from the tight market for machines. In addition, the miner produced 0.1 bitcoin ($4,697 at today’s price).

ROI: We achieved a 60% return on investment.

Case B: Buy and hold📈

Costs: If we did not buy a miner, we would have invested $9,800 in bitcoin on June 1st. This would have yielded 0.26 Bitcoin (based on $37,340 on June 1).

Revenue: The bitcoin would have earned about $287 interest in a BlockFi account. More importantly, there’s been significant appreciation since June. The initial investment in 0.26 bitcoin would now be valued at $12,327 (based on bitcoin price of $46,970 today).

ROI: We would have achieved a 29% return on investment.

Takeaways📊

Bitcoin mining could outperform buying and holding the bitcoin. However, the economics would look different if we sold the miner for less than we bought it. I imagine the price of miners will drop during the crypto market. Timing is key.

The 60% ROI is good but it pales in comparison to some other opportunities we could have pursued. During that time period, Solana was +460% and Chainlink was +280%. Bitcoin mining could be a part of a comprehensive crypto strategy. But please do your own research. I am not a financial adviser, just sharing my experience.


NEWS 🗞

1. Winter is coming: Are you in it to win it?

  • 2021 has been a standout year for crypto. Millions of new investors have dived into the space. Millions of people have found utility and joy through the products and services enabled by blockchain technology. But it is NOT always going to be like this.

  • Crypto winter is coming. I don’t know when it will be or how long it will last but history tells us to expect a deep, sustained price crash for a couple years. The good news is that when winter is over, the crypto summer bull market will take us to new heights.

  • Crypto OGs like the winter because the fakers get out and the OGs double-down. Coinbase used the last crypto winter to buy up companies that have helped cement their dominant position. As an individual, you should have a strategy for the crypto winter. Remember, Warren Buffett said “be fearful when others are greedy, and greedy when others are fearful.” Are you in it to win it?

2. Crypto for Christmas?

  • CashApp and Robinhood have rolled out the capability to send crypto gifts just in time for the holidays.

  • I am excited about this because both of these companies have a sizable user base

  • This could be a great gift for that person who has everything. We have friends who have been gifting bitcoin to all the children in their life.

3. Metaverse Magna: Play to earn in Africa

  • I am very bullish about the potential of play to earn in Africa. This is because 60% of Africans are under 25yo, internet penetration is greater than 60% in key countries, and unemployment has worsened.

  • Metaverse Magna was launched this week. It is the first and largest African crypto gaming DAO with a scholarship program. In Asia, gamers have earned up to $1000 a month playing crypto games but the start-up costs can be high ($1200 for Axie Infinity).

  • Metaverse Magna has a scholarship program with over 160 gamers using rented out Axies and splitting the earnings. With Africa’s population set to grow to 1.7 billion by 2030 (World Bank), I am excited for play-to-earn games to gain a foothold on the continent.

4. Jack Dorsey names Bitcoin Trust board

5. Everyone has an NFT, metaverse play

  • It feels like everyday another major company announces a play in NFT and/or the metaverse. This brings me back to the point about the fakers getting out of the space during the crypto winter.

  • This week, Nike bought a company that makes sneakers for the metaverse

  • Companies are opening up virtual offices in the metaverse for employees to return to work. Maybe Bill Gates was up to something, I remain a lil skeptical in the short-term.

  • Here’s a roundup of what companies’ said about the metaverse during their earnings call


That’s all folks! I hope you have a merry Christmas!

O dabo

Afo