For Miners: Controlling Crypto Mining Risks with Financial Tools
Financial tools help crypto miners to better avoid risks and lock in earnings. Crypto mining is different from speculation as mining input is a fixed asset with poor liquidity, such as mining machine and mining farm. In the long run, the asset of crypto mining is continuously devalued. The price of cryptocurrency generated by mining fluctuates greatly, and miners need to bear relatively high risks. Therefore, it is essential for professional miners to control risks with the help of financial tools.
Deposit cryptocurrency and generate interest
The essence of depositing cryptocurrency and generating interest is that institutional investors finance cryptocurrency to users at a low cost and use the cryptocurrency to make venture capital investment. Therefore, users can get a certain annual interest, which is very low.
Compared with putting money in the wallet, there is more reliable for coins to stay in crypto platform, which can not only get the pricing increase of money, but also get the interest income. But the risk lies in the failure or closure of the platform, as well as cyber hacker attacks. When choosing a platform, try to choose a platform with a large scale, high visibility and long operation time. At this time, miners should consider the risks and benefits comprehensively. Do not risk saving cryptocurrency on some unknown small platforms because of the small difference in the annual income.
Hedging is more suitable for miners on the fiat money standard. Based on the judgment of the market, sell the currency output for a period of time in the future, lock in the fiat money income, and obtain the cash flow when the predicted currency price is a stage high. If the judgment is correct, the mining return period can be greatly shortened, and the risk of the miner’s hedging is controllable.
The meaning of pledge loan is to pledge bitcoin to the platform, and the platform loans to customers according to a certain pledge rate. Customers only need to pay a certain amount of loan interest, so that the miners don’t need to sell cryptocurrency and they have the money to pay for electricity.
The pledged loan can also be used in other scenarios. For example, if you predict that the market has reached the bottom of the bear market, there are a lot of cheap mining machines in the second-hand market, but you have no money, you can also obtain cash flow to expand production scale by means of pledge loan. All in all, the close combination of crypto mining and finance is the inevitable trend of industry development as well as the necessary skills of professional miners.