A big challenge facing cryptocurrency miners is what to do with mined cryptocurrency. Do they liquidate a position to satisfy business expenses? Do they hold onto their crypto based on expectations for future returns? Sazmining Inc. recognizes this challenge and helps miners find a balance between liquidating and holding as well as navigating products to maximize the returns on what they have in storage.
Sazmining has worked closely with BlockFi who offers both crypto collateralized loans and interest-bearing savings accounts for cryptocurrency. The loan products allow miners to cover operational expenses or expand mining capacity without selling cryptocurrency reserves. BlockFi’s savings accounts allow miners to earn interest on mined crypto with a yield of up to 8.6%. Mining profits held in reserve represent a major pool of untapped potential. Leveraging this pool of capital to create additional income streams is an excellent way to improve profit margins while maintaining liquidity needs.
Miners can also maximize profits through options. Miners can now find Bitcoin options on one of the United States largest commodities markets. Options are financial contracts that grant their purchaser the right, without obligation, to buy or sell an asset at a certain price within a given time frame. They are most often used as hedging instruments, allowing their purchasers to manage how much risk they take on with an investment. Using these options as hedging instruments can be a game changer for crypto miners. The benefits miners can derive from hedging instruments include:
- Predict cash flow up to 6 months out
- Lock in earnings on Bitcoin not yet been mined
- Adjust risk levels to fit strategic goals
- Take a proactive rather than reactive stance towards volatility
- Unlock latent liquidity and increase mobility
Mining profitability increasingly depends on economy of scale. Larger operations yield a better expense to revenue ratio, but with higher operating costs. Better planning is required to weather protracted bear markets and other unforeseen events. Bitcoin options and other hedging instruments are likely to become increasingly important tools for miners over time.
As competition in the space continues to heat up, more efficient and effective utilization of all available resources will become more and more important. Fully integrating the latest financial offerings into a mining business strategy improves the chances of achieving and maintaining a dominant market position. To hear more from Sazmining Inc. on these and other cryptocurrency topics, subscribe here for exclusive content and updates.
About Sazmining Inc.
Sazmining is the leading US based operation offering a 360 approach to cryptocurrency through joint venture crypto mining projects, consulting services and treasury management to help our partners and investors navigate the financial aspects of cryptocurrency management. Our team has built and scaled a wide range of mining operations in locations as diverse as China, Texas, and Iceland. We are well positioned to offer a range of services to new entrants to the industry, or established players looking to expand. To learn more about us, visit https://www.sazmining.com/consulting.