Cryptocurrency mining has exploded over the past five years as
Bitcoin, Litecoin Ethereum, and related cryptocurrencies have become popular
forms of this type monetary transfer. One of the key strengths as a relates to
cryptocurrency mining is that these businesses are generally always able to
remain profitable and cash flow positive. Outside of the individual that owns
this business, there is usually no need to have a large staff. The gross
margins generated from operations is 100% given that once complex mathematical
problems are solved, revenue is generated by receiving coins. One of the key
strengths of these businesses is that they can be started with very low amounts
of capital given the simple fact that a computer is only needed to engage in
these operations. These businesses can be started for his little as $500. One
of the other key strengths is that they are highly scalable and that additional
acquisition of cryptocurrency can allow for the rapid growth of these
businesses.
For weaknesses, it is no secret that cryptocurrencies have extreme volatility.
As such, the underlying profitability of these businesses can vary on a
day-to-day or even an hour by hour basis. This is also an unregulated market as
it relates to the usage of crypto currency for purchasing actual goods and
services. The nascent nature of this industry has required entrepreneurs to be
diligent in every aspect of operation. These businesses also have high
operating cost especially from an energy standpoint given that high-speed processors
are needed in order to effectively mine cryptocurrencies.
As it relates to opportunities, more and more cryptocurrency businesses are
expanding their operations by acquiring additional equipment. One of the
interesting things about this industry is that many cryptocurrency miners are
beginning to use wind energy and solar energy to reduce and eliminate their
underlying utility costs. As more cryptocurrencies enter the market, there’s a
substantial opportunity to mind them as well.
For threats, cryptocurrency mining now carries a substantial number of issues.
Foremost, this is an unregulated market which may face new legislation or
regulation in the coming years. As such, an entrepreneur that is engaging this
activity should retain a qualified attorney to make sure that mining operations
are done within the letter of the law all times. Additionally, cryptocurrency
miners do face issues regarding theft depending on how the currency is stored.
As such, highly established procedures and protocols must be implemented in
order to ensure that issues pertaining to regulation, theft, or related issues
are kept to an absolute minimum.
Cryptocurrency mining is a very unique and interesting business that is
expected to continue to explode over the next 10 years. While there are still a
number of questions regarding this industry and how will grow, a qualified
entrepreneur that has an understanding of this market is poised to generate
substantial revenues moving forward.
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