A Mining Rig In Every Home? - Seeking Alpha

It's five AM and I should still be asleep, but that doesn't come easy these days. I recently wrote an article on Bitcoin and the altcoin market. I have to admit I am still new to it, but I cannot stop thinking about the ramifications.

I already mentioned that I originally invested in a Bitcoin-backed pink sheet fund a couple of years ago which was the only vehicle available at the time to get exposure in a IRA. From there, I began thinking in October/November that I wanted to try coin mining. Now, as you most likely have heard, mining for Bitcoin is a very specialized process due to the maturity of the market and the way the algorithm is written. It requires specialized hardware which you have to order months ahead of time from overseas.

While that has been a profitable undertaking for some, overall, it has not showed enormous overnight gains because the difficulty increases over time and the equipment requires maintenance and slowly makes less and less bitcoin. This is exactly what you would expect in an adoption curve, the people that get in very early do all the work so that those that follow can benefit from it.

However, the alt-coins and even Ethereum for the time being, are mined with computer graphics cards. Make no mistake, a miner is a computer that turns electricity into money. I cannot say it any more clearly than that.

I have seen at least one article detailing how little money can be made from mining. I had a good laugh. Look up Genesis Mining if you think there is no money to be made.

After I started mining and realized the potential, I thought of two business plans I wanted to implement. First, I wanted to find an investor to build a mining "farm." I don't have $80,000 lying around, but I have the know-how to get it done. Second, I thought I could simply make and sell miners, because obviously everyone would want one.

Neither idea has worked out so far (although I am close on the second one). As for selling mining-rigs, I soon discovered that would be like selling the goose that lays the golden egg. There really isn't a price I would put on my mining rigs. Well, I have about $8,000-$10,000 invested I think (honestly I haven't added it up yet, but thank you Bank of American for 18 months no interest) and I wouldn't sell them for $50,000. Am I making more rigs? What do you think?

So, now you are wondering, what's the ratio of electricity cost to income, 2:1, 3:1? Let me give you an example, with one graphics card from AMD, you can mine $7.50 today for about $.50 in electricity. Yes, the return is that great. But, it is even larger, as I will explain.

Altcoins and tokens are essentially IPOs for geeks. These are start-ups that don't need access to Wall Street and big bankers. These are ideas almost in the garage stage in some cases. In others, they are prototypes. Filecoin - a coin that will enable distributed, crowd-based storage of your data on the blockchain through any PC plugged in anywhere. Symmetry fund (disclosure I invested) - a token that invests in other tokens and coins. The ideas are endless and fascinating and because they have not had multiple rounds of funding, the coins come out at level 1 investor prices. Think Apple while Steve and Woz were still working out of the garage.

Monero is a large-cap privacy coin (about the 13th largest) with a valuation $5.,500,000,000. A privacy coin is a coin that you cannot trace like you can Bitcoin. With Bitcoin, if I know your wallet address, I know everything that has ever happened to your account, every transaction in and out and when and what wallet sent it. Sumokoin is a privacy coin with a market cap of $22,500,000 (I'll revisit that in a month). Which one would you mine? Honestly, Monero has a great roadmap, a huge amount of development and a bright future. But, if I can mine approximately $7 of either one, I am going to mine Sumokoin. The valuation will move, it is fundamental in a market this new. So, I am not mining $7 a day, I am mining some multiple of that because I will HODL ("Hold on for Dear Life) my coins until they have a better value.

My current plans are to selling about 1/3 of what I hold at the end of each week with limit orders and hold the rest. In this way, I should grow the amount I hold and the amount I sell each week. My goal is to add one graphics card per week. Even if returns diminish, at the end of the year I will have spent about $35,000 and have a monthly income of $6,000 or so from mining (along with a large electric bill!)

I have so many thoughts coming out of this new area not just on coins but on market ramifications, economic impacts, social stratifications. Are IPO's dead? What if everyone starts printing money? How much new innovation is coming because of this huge opportunity for funding of new ideas? I will continue writing about it because I am pretty sure most people either see the whole blockchain universe as a fad or bubble. It is more like AOL on a 14.4 k modem in the age of the internet. Clunky, not easy to use, inefficient, 5 minutes to download one photo, but it led somewhere.

Let me know what you think. Comment and share your thoughts on where it goes. I have more thoughts and I will share them as time goes on. This is a new era. So, now tell me - do you want a mining rig in your home?

Disclosure: I am/we are long ARKW, GBTC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am also long SUMO (coin), SYMM (token) and bitcoin