The three crypto Miners that we have lumped into a group together have been very hot. Why is this?
- Mechanical Tech (MKTY) $3.63 – Market Cap $34.7 Million
- RIOT Blockchain (RIOT) $11.73 – Market Cap $562 Million
- Marathon Patents (MARA) $12.98 – Market Cap $605 Million
Crypto mining is the industry term for creating a blockchain formula. In the case of Bitcoin, it is a formula created specifically to be used with Bitcoin specific instructions in the code. This is actually a computational formula requiring computers rather than human effort.
However – the term mining in Crypto mining is very similar to the mining of precious metals. Let use gold as the example.
Like Gold, mining crypto currency has mostly fixed costs. As the price of gold goes above its fixed costs, the profit margin can be 80 to 90%. This is because the cost of mining has a very low variable cost, no matter how much you mine.
The same is true in Crypto mining. The biggest cost of crypto mining is electricity, about 40%. Then there are the computers (fixed) and very few employees needed, a fixed cost. As the price of crypto currencies rise, as Bitcoin is and others as well, profit margins expand dramatically. The cost of electricity, computers and labor is not rising in the same way the price of bitcoin is rising.
Where Value meets Buy Signals!
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