Embrace the Mining Journey: Day 719, Full of Enthusiasm
In the past two articles,牡丹姐explored what bitcoin mining really is and its role in the entire bitcoin network from both industry and system perspectives. As these issues become clearer, a more realistic and closer question for entrepreneurs and investors naturally arises:
If we consider mining as a business, does its business logic stand up? Is it a speculative activity relying on luck and market trends, or a business model that can be broken down, evaluated, and operated for the long term?
It is necessary to answer this question seriously because, in reality, judgments around mining often lean towards two extremes: either ignoring the hidden costs and cycles behind the astonishing returns during bull markets, or summarily dismissing its commercial value due to price volatility without ever truly analyzing its cost-benefit structure.
In fact, only when mining is put back into the framework of a “normal business,” does its logic become clear.
Today,牡丹姐invites everyone to view mining as a common business operation, analyzing its inputs, outputs, and risks like analyzing a factory or a power station.
When looking at the revenue side, the logic of bitcoin mining is actually very direct. The main source of income for miners comes from two sources: one from the new bitcoins issued by the system, and the other from the transaction fees paid by users. They together constitute the fee that the bitcoin network pays for “maintaining the safety of the ledger.”
For an individual miner, the amount of income depends not on subjective judgment, but on a relatively simple proportional relationship: the proportion of the computing power you possess in the total computing power of the network.
This means that mining is not about “the more you mine, the more you earn,” but about “the proportion of computing power determines the proportion of output.” If a miner has 1% of the effective computing power of the network, then on average in the long run, he will also obtain nearly 1% of the block reward and transaction fees. This mechanism makes mining more like a scaled, probability-stable business rather than a one-time speculative act.
Compared to the certainty on the revenue side, the truly complex part of mining lies in its cost structure. For most mining farms, the cost can be归纳 into three main categories: equipment cost, electricity cost, and ongoing operational costs.
Among them, mining equipment is often the largest initial investment, but also has the fastest depreciation. The economic life of mining equipment is not like traditional production equipment, which can be used for tens of years. Its economic life is often only two to three years, even shorter. This makes mining inherently have a distinct “capital-intensive” and “time-sensitive” feature.
Electricity cost is the long-term variable in mining and the key factor determining competitiveness. Under the same equipment and management level, the difference in electricity price almost directly determines the survival capacity of a mining farm in the cycle. It is for this reason that the mining industry naturally tends to be concentrated in areas rich in energy and low in cost, which is no different from traditional high-energy-consuming industries such as smelting and electrolysis.
For the operating cost, including the cost of the site, heat dissipation, maintenance personnel, network access, and management expenses, although they occupy a relatively small proportion in the whole, they determine whether a mining farm can run stably and smoothly for a long time.
Mining may seem simple, but in reality, it is a business that highly depends on detailed management. Any mistakes in any link may be magnified into a significant cost disadvantage in the long run.
Bringing income and cost together, we can better understand the profit logic of mining. It does not rely on judgments on the direction of prices, but relies on a more straightforward question: whether your unit cost is low enough in a complete price cycle, and whether you can survive the trough and obtain super profits in the high point.
The mining farms that seem to have astonishing profits in the bull market are not necessarily because they make more accurate judgments, but because they can still operate during the bear market.
In this sense, mining is more like a typical cyclical industry. When prices rise, new computing power continuously enters, competition intensifies, and marginal costs rise; when prices fall, higher-cost computing power is forced to exit, and industry concentration improves. This “computing power reshuffle” is an important mechanism to maintain the long-term stability of the entire system.
Understanding this point makes it not difficult to explain why mature miners pay more attention to the cost curve than to short-term price fluctuations. For them, what is truly important is not how much the price of bitcoin has risen today, but whether their equipment, electricity, and operation structure will have sustained competitiveness in the next two to three years. This way of thinking is no different from traditional manufacturing or energy industries.
For investors, this business model also means that mining is not a simple high-leverage gamble, but a comprehensive test of resource allocation capabilities, cycle judgment, and execution ability. It is not as exposed to price fluctuations as buying coins, nor as stable and predictable as traditional fixed income, but is between the two, with clear operating attributes.
Therefore, when we talk about whether it is “worth participating” in bitcoin mining, the real question does not lie in short-term market conditions, but in whether the participants understand what kind of business it is and whether they have the resources and patience to match it.
From this perspective, the long-term existence of bitcoin mining is not because it perfectly avoids risks, but because it puts the risks in a manageable, comparable, and bearable position. It requires participants to make clear judgments about costs, cycles, and their own capabilities before entering, rather than relying entirely on market sentiment.
This is why those who participate in mining for the long term are often not speculative investors chasing short-term market conditions, but those who have a full understanding of energy, asset depreciation, and cycle fluctuations, and operators and capital. For them, mining is not a bet, but a resource allocation choice. It is to find a more controllable way to participate in “bitcoin, this new type of asset” within the existing asset structure.
When mining is placed in such a context, its significance is no longer limited to the issue of whether it can make money or not, but extends to a longer-term judgment: in a constantly changing financial system, how to participate in a decentralized value network through real assets and sustainable operations.
I am牡丹姐, dedicated to being a stream of fresh air in the Web3 world, advocating for a rational, scientific, rigorous, and compliant professional attitude. If you are also cultivating in the Web3 track, welcome to leave a message in the comments section and discuss things about Web3 entrepreneurship and investment together.
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About牡丹姐
Web3 Night Banquet Organizer
Fumei Family Office Founder
Fumei Web3 Venture Capital Circle Organizer
A public servant turned entrepreneur
Executive Vice President of the Hong Kong Blockchain Education and Industry Association
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