Investment Guide - Increasing Mining Contract Profits through Strategies

Part 1: Product Information:

- BTC Mining Contract
- Duration: 70 days
- Investment Amount: $24,920
- Hashrate Quantity: 5,000T
- Hashrate Fee: $0.0112/T/day
- Service Fee: $0.06/T/day
- Current Daily Coin Production: 0.0000024 BTC ($0.0739/T)
- Current BTC Price: $30,800
- Assumed BTC Price after 70 days: $35,000

Part 2: Strategy Summary and Profit Comparison:

Investment Logic Summary:

- Strategy 1: The staged payment feature actually gives the product leverage. It is recommended to use all funds to purchase as much hashrate as possible, without reserving funds for service fees, to gain more BTC and earn higher profits when selling BTC.
- Strategy 2: When the coin price is higher than the acquisition price (cost), sell BTC to pay for service fees (and pay for additional days if possible); when the coin price is lower than the acquisition price, use USDT to pay for service fees, taking advantage of price fluctuations during the mining contract period to reduce costs and increase profits.

Profit Comparison using Different Strategies:

2.1 Lump-sum Payment of Full Service Fees:
Investment Amount (cost) = 0.0112 70 5,000 + 0.06 70 5,000 = $24,920
BTC Quantity Obtained = 0.0000024 70 5,000 = 0.84

- Based on the current coin price ($30,800):
BTC Proceeds from Selling = 0.84 * 30,800 = $25,872
Net Profit = BTC Quantity Coin Price - Cost = 0.84 30,800 - 24,920 = $952

- Based on the ending coin price ($35,000), BTC Proceeds from Selling = 0.84 * 35,000 = $29,400
Net Profit = BTC Quantity Coin Price - Cost = 0.84 35,000 - 24,920 = $4,480

2.2 Strategy 1 only, pay only 10 days of service fees during order placement, and purchase as much hashrate as possible. Subsequent service fees are paid from mining income. With the same investment amount during order placement, you can purchase 18,000T.

Investment Amount (cost) = Hashrate Fee for 70 days + Service Fees for 10 days = 0.0112 70 18,000 + 0.06 10 18,000 = $14,112 + $10,800 = $24,912
Subsequent Service Fees = 0.06 60 5,000 = $64,800

BTC Quantity Obtained = 0.0000024 70 18,000 = 3.024

- Assuming the mined BTC is immediately sold to pay for service fees at the current coin price ($30,800):
BTC Proceeds from Selling = 3.024 * 30,800 = $93,140
Net Profit = BTC Quantity * Coin Price - Subsequent Service Fees - Investment Amount = 93,140 - 64,800 - 24,912 = $3,428 (3.6 times higher profit)

- Based on the ending coin price ($35,000), BTC Proceeds from Selling = 3.024 * 35,000 = $105,840
Net Profit = BTC Quantity * Coin Price - Subsequent Service Fees - Investment Amount = 105,840 - 64,800 - 24,912 = $16,128 (3.6 times higher profit)

2.3 Utilizing both Strategy 1 and Strategy 2, pay only 10 days of service fees during order placement. During the mining contract period, when the coin price is higher than the purchase price, use BTC to pay for service fees; otherwise, use USDT to pay.
With the same investment amount during order placement, you can purchase 18,000T. Assuming that 35 days of electricity fees were paid when the BTC price was $33,000.

Investment Amount during order placement is the same as in 2.2, so it's not repeated.
Hashrate Quantity: 18,000T
Investment Amount during order placement (cost): $24,912

Service Fees paid in USDT for 30 days = 0.06 30 18,000 = $32,400
Service Fees paid in BTC for 30 days = 32,400 / 33,000 = 0.98182 BTC

BTC Quantity Obtained = 0.0000024 70 18,000 - 0.98182 = 3.024 - 0.98182 = 2.04218 (after deducting the paid service fees)

- Assuming the BTC is sold at the current coin price ($30,800):
BTC Proceeds from Selling = 2.04218 * 30,800 = $62,899
Net Profit = BTC Quantity * Coin Price - Subsequent Service Fees (USDT portion) - Investment Amount = 62,899 - 32,400 - 24,912 = $5,587 (5.9 times higher profit)

- Based on the ending coin price ($35,000), BTC Proceeds from Selling = $71,476
Net Profit = BTC Quantity * Coin Price - Subsequent Service Fees - Investment Amount = 71,476 - 32,400 - 24,912 = $14,164 (3.2 times higher profit)

Part 3: Summary:

Lump-sum payment of service fees has the lowest maximum profit.
Paying only 10 days of service fees during order placement and maximizing hashrate can generate a leverage effect, increasing the maximum profit by 3.6 times. This approach fully utilizes the advantage of daily mining income and improves fund utilization.
Combining Strategy 1 with service fee payments can increase the maximum profit to 5.9 times when the coin price remains the same. However, when the mining contract ends and the coin price increases, the maximum profit may be slightly lower than not using the service fee payment strategy.
Cloud mining is a financial product with high barriers to entry, moderate risk, and relatively stable returns. The higher barrier to entry means that individuals with professional investment strategies can achieve higher returns in this product.

Part 4: Lock-in Profit with Hedging Strategy:

Q: What should I do if the coin price keeps falling after purchasing the mining contract?

A: Hedging Strategy--can help you lock in profits.

Steps:
When you invest $1,000 to purchase the mining contract, you can simultaneously open a short order of equal value ($1,000) on the exchange.
Whenever you sell the mined BTC, you need to close an equivalent value of the short order. For example, when you sell $50 worth of BTC, you need to close a $50 short order.
When the coin price drops, resulting in losses in the mining contract, the short order will generate profits, offsetting each other and effectively locking in the profits.

Tips:
The short order can be leveraged, and the leverage ratio can be chosen based on the situation to ensure that it does not trigger liquidation. For BTC, it is generally recommended to choose a leverage ratio of 2 to 3.

Advantages: Locking in profits and fully offsetting the investment risk caused by coin price drops.
Disadvantages: Requires a larger amount of capital.

Updated on: 21/07/2023