Why am I investing in hosted bitcoin mining and how much I am planning to invest

So there are several reason why I am investing, and why in hosted bitcoin mining. Let’s go through them one by one.

I was lucky with Stock Options at the company I am working at and have free capital

So yeah, this is definitely what made me start looking into hosted bitcoin mining. I must admit, I got really lucky at my current company. I was awarded some stock options during my 5 years there, and the stock price kept growing and growing. In 2021, the company was acquired, and all my stock options and ESPP stocks got cashed out. So now I have some free capital that I want to use to diversify my portfolio. Most of my current investments were done in some Vanguard and other funds using my 401k or my regular investment account. However I believe that having a healthy share of investments in Cryptocurrency is a smart diversification. So I started to look at hosted BTC mining as a way to deploy this capital.

100% of Bitcoin miners costs can depreciated (write-off) the year they are purchased

As mentioned above, my stock options got cashed out due to acquisition. Which is of course a good news. But it also means I will have to pay income taxes on all the profits, which probably would add up to 50%. When I found out that Bitcoin mining equipment can be depreciated the same year it is bought, it got my attention. My stock options got cashed out in October 2021. So I have until end of 2021 to buy miners and I can write off 100% of their costs. Since I am starting late in the year, they will create a loss for 2021, and I can lower my 2021 income by this loss. In short – the miners will really cost me about 1/2 of what I pay on them, because otherwise I would have to pay 50% on taxes which now I don’t have to. I am planning to invest around $200,000 from my stock options sale into hosted bitcoin miners.

Hosted Bitcoin mining is currently profitable and created a nice ROI

When I started to look into hosted bitcoin mining, you could find deals where ROI would be in 6-9 months, which is crazy fast ROI compared to any other possible investment. However by the time I started to get serious about it (November 2021), the demand for miners sky-rocketed and it is very hard to even find capacity still in 2021. Right now I am looking at ROI more in 10-14 months range. Still good, but definitely not as good as 6-9 months. Of course, this ROI can change from one day to another. It depends on bitcoin mining difficulty and on the price of bitcoin. So we will see in 10 or so months where I stand on that.

I am a believer that Bitcoin Price will be increasing over time

Even though the current ROI is 10 or more months, that’s calculated at current BTC price. I have a HODL mentality and unless really necessary. I might sell some BTC to cover for the taxes I need to pay next year or so. Or to buy more mining equipment. But other than that, I plan to hold everything I mine and bet on increasing BTC price over time.