1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocation of $225,000 for a Bitcoin and cryptocurrency trading business located in Philadelphia. Bitcoin Trader, Inc. (“the Company”) will be actively engaged in the buying and selling of digital currency (both long term and short term strategies). The Company will also use a number of computer nodes in order to generate ancillary streams of revenue from mining digital and cryptocurrencies. The business was founded by John Smith. Revenue generating operations will commence in 2020.
As stated above, the principal revenue stream will come from the ongoing acquisition of digital currencies for capital appreciation purposes. The business will also use trading strategies that provide short-term yet consistent profits on a day-to-day basis. Regarding the pricing of crypto currencies and digital tokens, the founder sees a substantial opportunity to generate ongoing profits by examining the market and making appropriate investments on both a short-term and long-term basis.
On a secondary basis, the Company will be actively engaged in the mining of digital currencies. This will consist of acquiring large inventories of computers – equipped with high-powered processing systems (CPUs and GPUs) – that will allow the business to generate income by processing transactions on block chain ledgers. Unlike the trading business, the Company will be able to generate ongoing profits by providing this service. A substantial portion of the capital sought in this business plan will be used for the acquisition of computers that can allow the business to cost-effectively engage in the mining of digital currencies.
At this time, the founder is seeking $225,00- in capital in order to commence revenue-generating operations. The terms of this investment are to be determined during negotiation. The funds will be used for the following:
Capital for treating it coin and related digital currencies
Acquisition of computer equipment for digital currency mining
General working capital
The next section of the business plan will further discuss the usage of investment funds.
1.3 The Future
As time progresses, the Company will make continued and sustained investments into the businesses operating infrastructure. Given that the business will operate within exchanges of digital currencies, there is no need to create a marketing campaign and less the business decides to accept funding from third-party investors that want to use the company for digital currency trading.
2.0 The Financing
2.1 Use of Funds
Below is a breakdown of how the $225,000 of capital will be used:
2.2 Investor Equity
This will be discussed during negotiations
2.3 Management Equity
Mr. Smith anticipates that he will retain 50% ownership of the business once the capital in this business plan is secured
2.4 Exit Strategies
In the event that management finds it financially prudent to do so, a qualified business broker or mergers and acquisitions focused investment bank will be hired in order to manage the sale of the business to a third-party. Although this is a nascent industry, be price-to-earnings multiple for a digital currency trading firm typically ranges around 2 to 3 times the previous year’s earnings.
3.1 Buying and Selling of Digital Currencies
The primary focus of the Company’s operations will be on the acquisition of popular digital and cryptocurrencies that will allow the business to profit once the price of these instruments increases. The business will use both long-term and short-term strategies in order to provide daily profits, which will be smaller, as well as larger long-term gains.
Given the prevalence of digital currencies, the founder sees a substantial opportunity to invest among a number of different types of digital currency asset classes with the intent of producing capital appreciation. The business may also use options and short selling techniques to profit from declines in these currencies.
Digital currencies traded by the business will include BitCoin, LiteCoin, Ethereum, Ripple, and Libra.
3.2 Digital and Cryptocurrency Mining
A strong secondary aspect of the company’s operations, as discussed in the executive summary, will come from the ongoing mining of digital currencies. This is an important revenue stream for the business given that it will provide highly predictable streams of daily income. The business will spend approximately $2.5 million (leased) on computer equipment that can process block chain ledger transactions. For providing the service, the business will receive digital currency that can then be converted into traditional US dollars. The revenues generated from this aspect of operations will generally finance the entire operation the business.
4.0 Market Analysis
4.1 Economic Analysis
Currently, the worldwide economy is going through a continued growth spurt. Although unemployment rates have declined sharply and asset prices have increased substantially – worldwide interest rates remain relatively low. It should be noted that the revenues generated by the Company will be relatively immune from negative changes in the economy. This is due to the fact that the business will be engaged in open market transactions, and as such – the business will be able to remain profitable and cash flow positive at all times.
4.2 Industry Analysis
Although this is a nascent industry, there are approximately 200,000 people and companies that are actively engaged in the trading and mining of digital currencies and cryptocurrencies. Each year, these firms generate approximately $8 billion in fees as it relates to these operations.
It should be noted that there are
now a number of major investment banks that have developed trading desks as
well as options exchanges specific for a number of different types of digital and
cryptocurrencies. This trend is expected to continue in perpetuity as the
prevalence of digital currencies as a form of payment becomes more prevalent.
Given that there are now more than 200,000 firms actively engaged in the trading and sale of crypto currencies, it is very difficult to determine the competitors that the business will face moving forward. The company will need to engage in a number of best practices in order to ensure that it remains on the forefront of technology related to digital currency trading and mining. The Company will reinvest a substantial portion of its after-tax profits in order to ensure that it’s infrastructure is state-of-the-art.
5.0 Marketing Plan
As the business will be engaged in open market transactions, the Company will not need to maintain a formal marketing plan or advertise its operations to the general public. However, as the company develops a strong track record for engaging in digital currency trading – the Founder may seek to acquire capital from third-party investors that can be managed by the company.
This would require a substantial marketing campaign that specifically targets qualified and accredited investors that are able to properly place funds with the Company for this purpose. In this event, Bitcoin Trader, Inc. will hire a qualified advertising firm as well as a law firm to properly develop advertisements that can be shown to prospective investors.
6.0 Financial Plan
6.1 Financial Assumptions
The Company will acquire $5 million in capital in order to engage in the activities outlined in this business plan
The Company will have a annual revenue growth rate of 20% per year in each of the next three years
Bitcoin Trader, Inc. will settle most short-term payables on a monthly basis
6.2 Financial Highlights
Profitability in a positive cash flow in each year
Assets that are highly liquid in the digital currency exchange market
6.3 Sensitivity Analysis
The Company’s revenues are not sensitive to changes in the economy. The business will employ tactics will that will allow the business to generate profits regardless of whether the prices of digital currencies are increasing or decreasing. Additionally, the business will maintain a very low cost infrastructure that will ensure that any short-term losses will not impact the company’s ability to operate on a day-to-day basis
6.4 Source of Funds
6.5 Profit and Loss Statement
6.6 Cash Flow Analysis
6.7 Balance Sheet
6.8 Breakeven Analysis
6.9 Business Ratios