In today’s article, we will talk about the most widespread business models regarding the mining of crypto. Everyone who has a powerful computer could start mining and earn a profit just by running software.
Business Models for Mining
At first there were a small number of participants in the market – mostly small entrepreneurs, but after crypto became more and more popular, competition has appeared. Miners have been investing in super powerful hardware in order to be able to continue to earn a profit. Everything seemed great and secure, but then came the crash, connected to the algorithm, market pressure on fees and all this decreased the miners’ profit. The cost for electricity has become unbearable even in places where it is a rather cheap commodity like Iceland.
Subsidized Electricity Mining
There are places in the world where there is a surplus of the produced electricity. Some of it is exported to other locations, but at some point miners appeared and took advantage of this unusual situation. However, after some time it was no longer profitable for them either since the margins grew too thin. In other places even not so educated people are willing to try mining, knowing the possibilities of the industry and using cheap industrial electricity from factories.
If you manage to reduce the cost of electricity you will surely increase your profit. Years ago some people used to mine in their dorms and in this were cutting expenses. However, today such behavior is intolerable and seriously punished – in some cases the thieves have even gone to prison. Another way of stealing is by mining, taking the profits, and then going out of business right away. Companies have declared bankruptcy while owning huge amounts of electricity.
Illicit cryptomining, also called cryptojacking, is one of the most widespread types of cybercrime which are targeting enterprises. It is all about putting mining software on someone’s computer without their consent or knowledge and in this way using their processor cycles and electricity. Although there are fluctuations in the prices of crypto, cryptojacking is stronger and more widespread than ever. This is connected to the fact that the malware has improved which helps the thieves execute their mission and take advantage of their unknowing victims. Rocke is an example of such malware which targets Git, which is where most of the source code is stored by enterprises. It has also been targeting miners using browsers, working on tough to catch trojans and many more illicit activities.
Escaping from Sanctions
There was a case involving Iranian miners. It involved 2 guys who purchased their equipment for mining when the USD in Iran was still strong and the electricity was cheap. We thought that they would be able to earn around 100 dollars per month. Forex prices and those of Bitcoin have dropped, but they were still making a profit. The only way to register losses was for the Bitcoin to drop to 2K dollars. As for North Korea – it could have made 200 million dollars if it was mining cryptocurrency in 2017. Because of the established criminal networks there, it could have been easy to cash it for real currency and then use it for purchases in the country. We could be sure that the mined coins are being used for currency or to maybe support the missile program of the country.
Mining at a Loss
The last model we will discuss in today’s article is mining as a loss. Hear me out here. It may not seem super-rational unless our main focus is to complete the transactions. This is where the Darknet comes in. If it was not for crypto, the illegal transactions happening there would be much harder to execute. Those individuals or organizations would go to the length of mining at a loss only to keep the technology going. It is too valuable for them and it brings them much more profit through their contraband to just abandon. This is encouraging for anyone who would like to participate in mining crypto – there is no way the prices will crash. Criminals will make sure this never happens.