|Bitcoin, Cryptocurrency, Financial Model, Financial Services|
|Cash Flow Analysis, Cash Flow Projections, Dashboard, DCF Model, Excel, Forecasting, NPV, Sensitivity Analysis|
The main purpose of this model is to compare when you may want to switch from in-house mining to cloud mining based on various assumptions.
This would change based on your assumptions about the future of Bitcoin (BTC) price as well as the difficulty % compounding increase.
Various NPV’s will populate in the ‘Summary’ based on how you structure the in-house/cloud assumptions together. The NPV represents both of them over the course of 27 months.
The in-house mining light yellow tab allows you to enter all your assumptions about buying mining equipment and the expected running costs of that as well as the current difficulty factor.
Then there is the light yellow cloud assumptions tab where you build a scenario for starting cloud assumptions after mining for a certain amount of time.
The idea is that you mine in-house and then at some point in the future you switch to selling mining futures contracts where customers pay up-front for a pre-determined amount of time and they earn any BTC rewards during that contract based on the amount of Th/s they initially buy.
In cloud mining, you have maintenance costs and up-front costs. This assumes you have a supplier that you purchase from rather than selling your own mining rewards. So, you are basically a middle-man in this situation.
One simple scenario you can do is model out if you buy equipment, mine for the next 8 months, and then switch over to cloud mining in month 9.
You will have 3 different contracts that you can measure a NPV from. Assuming you do 100% 12-month contracts, 18-month, or 24 month. Based on your inputs, the in-house mining revenue will stop and the cloud revenue will start and go until the contract length is up.
Everything is then measured in NPV per up to 5 different price predictions of BTC and per 3 different contract offering assumptions.
In general, customers would buy mining contracts (e.g. Bitcoin) to get future rewards if they throught the price of BTC is going up and a middle-man would want to facilitate this based on their thinking that the price of BTC is going to do down. This creates a market.
Charts have been added to show NPV based on all the various scenarios, but it is assumed that you will be able to fully sell as much Th/s as you would have been mining.