I have been writing a business plan for a solar powered Bitcoin Mining operation, but I've never written one before and not even ever started any businesses myself. This is in Costa Rica.
After it is completed I think I can be able to get enough investors to finance the whole thing, what I do need is for you to help me out finish writing this thing.
As for the hard part (getting the miners), I consider the manufacturer will sell me 100 items, even if for them it is a small order and even if I have to wait 6+ months. We'll see. Anyway, by the time I get all my ducks in a row, this bull market may have come to an end and it will be easier to get them.
If you think this whole thing is shit, you're welcome to say it as long as you're gentle: ''Your idea is horse manure to me dear sir'' or something like that.
Thank you for reading (there will be no tl;dr), let's get to it:
Summary:
Product:
Solar Farm Powered Bitcoin Operation will be powering the Bitcoin Blockchain with the hopes of being paid in the form of Miner Rewards and Transaction Fees.
Mission Statement:
To mine Bitcoin almost for free with the help of the cheap energy provided by the plenty amount of sun in Costa Rica.
The idea is to reinvest dividends for as long as possible, that way, the annual ROI will increase handsomely. This will be decided individually every X months when profits are paid to investors.
Company Description:
This venture will require a high investment up front to start operations in the form of land, work area building, house for the daily supervisor, solar panel infrastructure and the actual miners (ASICs).
This setup will allow us to mine Bitcoins with the lowest possible cost of electricity, which is the highest expenditure Bitcoin miners have worldwide. Solar being a renewable source of energy gives us and the environment the advantage of having a very low carbon footprint.
Mining Companies usually need to reinvest money in new ASICs before the life cycle of the old ones comes to an end due to efficiencies. In our case, we can use them until their life cycle comes to an end or are no longer fixable since our energy is almost free.
Land:
Preferably it will be a flat plot, close to the Pacific Ocean, between Quepos and Dominical. The shoreline is usually sunnier and hotter than land higher up. No more than $300.000 will be budgeted for the purchase of land but after reviewing options with several real estate firms will be decided which option is best. Investor opinions will be heard while making a decision.
ASIC housing:
My idea on this is to buy and convert one or two out-of-commission refrigerated shipping containers which will be buried on the ground on the side or under Management housing. Thought process behind this: application-specific integrated circuits (ASICs) generate high amounts of heat. Industrial refrigeration units need to keep this site at about 40-50 degrees Fahrenheit, hence this kind of container.
And, in the case we wanted / needed to move operations, we could just unplug it and move the whole container with everything installed inside without the need to pack every machine individually.
Estimated cost of each container is $7.500
Property house to be used by Management and by visiting investors: Cost of the house will be budgeted at around $150.000.
Solar panel infrastructure:
Quotes required from several panel manufacturers.
[info@seraphim-energy.com](mailto:info@seraphim-energy.com)
[sales@must-solar.com](mailto:sales@must-solar.com)
[sales.us@csisolar.com](mailto:sales.us@csisolar.com)
[sales@suntech-power.com](mailto:sales@suntech-power.com)
[jssolar@jssolar.com](mailto:jssolar@jssolar.com)
[sales@trinasolar.com](mailto:sales@trinasolar.com)
[latam@jinkosolar.com](mailto:latam@jinkosolar.com)
CR:
[solarinfo@crsolarsolutions.com](mailto:solarinfo@crsolarsolutions.com)
[info@avoltaenergy.com](mailto:info@avoltaenergy.com)
[sales@solarcostarica.com](mailto:sales@solarcostarica.com)
Only got a reply from jinko so far and they only sell panels and batteries, so not what we require.
To have an idea, we’ll contemplate the kits sold at Alibaba.com by DAH Solar. Costs are about $0.40 per Watt. So just to purchase the kits enough to power our 100 ASICs $140.000 will be required.
Bitcoin Miners (ASICs):
Each machine (from MicroBT; Whatsminer M30s++) currently costs about $4.000, power consumption is 3.472 Watts, and hash output is 112Th/s
Efficiency 31W/TH. Weight 13kg. Size 42*16*24cm.
100 machines will cost $400.000 and, with an annual average of 6 hs of sun daily, will produce about 0.456 bitcoins per month. Rounding the price of bitcoin down to $50.000 it gives us a revenue before expenses of about $22.822 per month.
These numbers are changing rapidly so it is estimated that when we buy them, they will be much better.
Delivery of these machines is about 5+ months after fully paid.
If we can get a good cost per kW from the power company we can think of doubling the total production to 1 bitcoin per month, so $50.000 revenue.
Crypto market take and trading plan for the first 10 years:
The first few years the company should have an expansionary mindset, try to reinvest in order to grow as much as possible.
The price of Bitcoin will most likely peak and will enter a bear market as has done 3 times since we follow it. What I’m trying to say is that we should not be scared if right after we invest, its price drops severely; in that case we will simply accumulate until it rises again.
Solar Installation:
Installation of the solar panels will be done by myself and local help to cut 75% of costs. $20.000 will be reserved in case a solar company needs to be contracted to do a final setup when everything is almost in place.
The idea is for management to learn as much as possible so in the future not to rely on external companies to do the maintenance in order to keep costs low.
The ground installation will be done as follows: Each array of panels will be held by steel pipes secured to the ground with concrete.
Costa Rica is 9 degrees from the Equator so that is the inclination south each array will have.
Then the panels will be able to be tilted in 3 positions, 45 degrees to the East, horizontal and 45 degrees to the West. This configuration will allow us to harvest the most radiation.
Each panel will need to be positioned by hand 3 times per day.
Breakeven:
We will consider round numbers just to have an idea;
Total initial investment: $1.000.000
Monthly btc generation: 0.5btc solar / 1btc solar+grid
Let’s say we accumulate and sell only at or above $100.000/btc
If no further money is invested in the company, breakeven could be expected on month 20 if using solar exclusively. During the 1st year with grid electricity.
If we reinvest the first $1.000.000 we can expect to break even at month 30 (solar only), and will happen before the first year and a half if we use both solar and grid power.
Of course these estimates will vary depending on the price per bitcoin.
Very rough estimation of setup costs:
- Land $300.000
- DAH Solar $0.40/W 350.000W required $140.000
- 100 ASICs $400.000
- Solar and ASIC setup $150.000
- Importing duties CR 13% est. $70.000
- House $150.000
- Labor, tools $50.000
- Lawyer / Accountant $15.000
- Freight, insurance, unaccounted items $ 40.000
- Total $1.315.000
Possibility of getting a special pricing from local energy company (ICE) for nighttime operation. ($0.03)
Possibility of selling energy to ICE (netting) to use ASICs outside of nighttime hours and outside of full sunshine hours.
Management Compensation:
$1.000 cash plus $4.000 worth of stock per month; until $2.000.000 total investments.
After the 2 million mark is reached and every time a new million milestone is reached, management will get an extra $1.000 worth of stock per month.
When employees are required due to the amount of hours the ASICs are running, they will get paid about $10/hour.
Stock Valuation:
Each share will be valued at $1.000 before we start operations.
After we start operations the price will be $2.000
Said value will stay fixed indefinitely. (So, if you invested $1.000 p/s ‘before’, you get paid $1.000 when you sell. If you invested $2.000 p/s ‘after’, you get paid $2.000 when you sell. Minus fees).
When it is time to pay dividends, the total amount of profits for the period will be divided by the amount of shares in circulation. That will be the amount paid per share.
New Investors:
We’ll call ‘’new investor’’ to any person that is buying stock after the company has started to be productive.
They will pay $2.000 per share to buy in.
New investors will start receiving dividends when their monies have become productive (i.e. when the infrastructure bought with said money is received and installed.) Usually about 3-5+ months.
Fees:
5% to be charged to any person buying up to 9 pieces of stock/shares before 1.000 pieces of stock/shares are in circulation.
3% to be charged to any person buying 10 or more pieces of stock/shares at one time before 1.000 pieces of stock/shares are in circulation.
8% to be charged to any person buying up to 9 pieces of stock/shares after 1.000 pieces of stock/shares are in circulation.
5% to be charged to any person buying 10 or more pieces of stock/shares at one time after 1.000 pieces of stock/shares are in circulation.
5% will be charged to anyone selling any amount of stock/shares.
Roadmap:
- When $500.000 are verbally pleaded to be invested:
I will reach one or more real estate offices to go see and make a list of possible tracts of land to be purchased.
An attorney and an accountant will be retained.
Agreement with the power company to provide electricity at low rates.
Single solar system will be purchased for my family home so I can start ‘’practicing’’.
- When $800.000 are verbally pleaded to be invested:
The company will be formed with the attorney.
A local bank account will be opened.
A bank account in the USA might need to be opened as well, and an account with an exchange, most likely Coinbase.
Investor opinions about the land to be purchased will be asked.
Construction companies will be approached to be ready to start building.
- When $1.200.000 are verbally pleaded to be invested:
Stock will be issued and cash will be transferred to the bank account.
Land will be purchased, any work required to make the site productive will start such as earth movements, tree removal, etc.
ASICs will be purchased (expect delivery to be no less than 3 months, 6+mo more likely)
Work will start to make the structures that will hold the solar panels.
Solar panels will be ordered.
SWOT Analysis:
Strengths:
- Location: Our location ensures plenty of sunny days that translate into ‘free’ electricity.
- Frugality: I intend to do as much as I can myself and with local help, so we can keep costs LOW. This will allow me to learn first hand and then be able to maintain all systems without involving external parties that usually charge large fees for their work (eg: solar).
- Low overhead.
- Little to no expenses.
Weaknesses:
- Inexperience setting up these systems may result in delays. May also require to hire experts for a final setup. This possible expense is accounted for, but the final dollar amount is unknown.
Opportunities:
- Again frugality, doing as much work possible ‘’under one roof’’, meaning, without contracting expensive outside firms to do what we can do just using a little more time.
- Mining with solar means that we don’t have to shut down if the price per coin is lower than the price other mining teams pay to mine their coins.
- Institutional adoption is currently underway, but massive adoption is still years away, we need to be ready for when that happens as prices will rise exponentially.
Threats:
- Price of Cryptocurrencies may drop substantially. If this happens we will simply use solar power to accumulate until prices are better. With no overhead and almost no expenses, we will be able to weather most circumstances.
If prices drop to a point where mining using grid power is not at least 10% profitable, we will simply stop mining at night.
- Regulations: If the local government decides to ban cryptocurrencies in any way that we cannot operate anymore, then a vote will be proposed as to what to do next.
- Hackers: Coins will be moved to a cold wallet daily to keep exposure to a minimum.
Scaling up:
Let’s say the bitcoin price averages $100.000 for some time and after investing our cool 1 mil (we are again rounding up or down for ease) we are producing 1 bitcoin per month using both solar and grid.
Let’s find out how soon we can 10x that investment.
1btc/month = $1.000.000 in 10 months. After we reinvest that we will produce 2btc/mo, so:
2btc/month = $2.000.000 in 10 months. After we reinvest that we will produce 4btc/mo, so:
4btc/month = $4.000.000 in 10 months. At this time we have $8.000.000 invested and we are producing 8 btc/month so in another 2.5 months we’ll make the $2.000.000 we were needing to complete out $10.000.000 reinvestment plan.
32.5 months is technically what we need to 10x our investment, since I like rounding things up so much, let’s call it 3 years even.
We also know that included in the first million are things that need not be purchased again, like the land and the house, but there will be other things that will delay reinvestment, so this is just to give us an idea of what can be done with what we have.
Things that will happen along the way: of course price will not stay where we want it, but it may go up or down substantially.
In 2024 there will be another halving event where the miner rewards will, well, halve in two.
Prices of solar panels and miners may go up.
Lots of new miners (like us) may jump in on the business driving the difficulty up and making mining less profitable.
So even if all the bad things that may happen happen, we can still 10x within 5 years.
How much land we need to park all those solar panels:
Each 6kW array has 18 panels, so it has an area of 36m2. Considering that each array will move to get more sun and they cannot shade each other we’ll consider each array needs 60m2.
We will need about 60 arrays, so the total area to set up the solar farm will be 3.600m2.
Considering that not the whole surface of the land will be ok to set them up, we’ll consider that we need 1 hectare (10.000m2 or 2.5 acres) per $million invested.
If we want to (at least) 10x our original investment, we will need to get 10 hectares or 25 acres of flat land.
Alright, if you made it this far, I'd like to hear your opinion!
Thanks for reading.
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