Do you want to start a bitcoin mining business? If YES, here is a complete guide to starting a bitcoin mining business with NO money and no experience plus a sample bitcoin mining business plan template.
If you love working from home, then you should consider starting an internet based business. One of the businesses that you can easily start at home with a computer is bitcoin mining.
Simply put, bitcoin is a digital currency that operates independently of any country’s central bank. In order to get an updated value of the worth of a bitcoin, you can make use of Google’s currency converter; it is a reliable platform to know the value of bitcoin each time. The current value of a bitcoin is 150 British Pounds and a block of bitcoin which is 25 coins is worth 3, 750 British Pounds.
If you are interested in mining bitcoin, then you have two options to follow. You can choose to mine a block of bitcoins from the computer or you can choose to pool.
If you want quick returns on your investment, then joining a pool is your best option because mining a block of bitcoins from your computer may take you a month or more before you get any return on your investment. Please note that if you join a pool, you will only get smaller payments, but you can be rest assured that you will get them at a regular basis.
Starting a bitcoin mining business can be rewarding but you would have to compete with other well established bitcoin miners on the World Wide Web.
The fact that you will be competing with people from all over the globe is enough reason for you to be result oriented and at the same be creative with your bitcoin mining business.
So, if you have done the required online or offline bitcoin mining related courses, then you might want to venture into this business.
18 Steps to Starting a Bitcoin Mining Business
1. Understand the Industry
Bitcoin mining in its simplest term is the practice of adding transaction records to Bitcoin’s public ledger of previous transactions or block chain. This ledger of previous transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.
As a matter of fact, Bitcoin miners help keep the Bitcoin network secure by approving transactions. Mining is indeed an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and highly secured.
Bitcoin mining as the name implies is similar to the mining of other commodities: it requires deliberate and calculated effort and it slowly makes new currency available at a rate that looks like the rate at which commodities like gold and copper et al are mined from the ground. Mining is also a mechanism used to introduce Bitcoins into the system.
Bitcoin is a type of digital currency that is created and held electronically; it is a cryptocurrency and a digital payment system that is invented by an unknown programmer, or perhaps a group of programmers. No one controls it. Unlike Dollars, Euros, Pounds and other currencies, bitcoins are not printed, they are produced by people and businesses running computers all around the world, using software that solves mathematical problems.
If you want to start mining bitcoin, you would need an online wallet where your bitcoins will be stored. There are several wallet options available online for bitcoin mining. The rule of thumb to follow before choosing an online wallet for your bitcoin mining is to choose a wallet that will allow you save bitcoins, buy bitcoins, use bitcoins and also accept bitcoins as a means of payment. The most preferred wallet option that has all these features is coinbase.com. You can check out their website to see how it works.
The Bitcoin (cryptocurrency and a digital payment system) industry is indeed a large internet based industry and pretty much active in countries such as United States of America, United Kingdom, France, Italy, Nigeria, Sweden, Australia, Japan, China, Germany, and Canada et al.
Despite the fact that the bitcoin mining business is still much of a Green business, the business will continue to blossom because more and more users will embrace the use of bitcoins in the nearest future. So, if you have an entrepreneurial mentality and you wish to join a massive technological revolution, you can start your own bitcoin mining business.
The truth is that you can build a bitcoin mining business even if you are not too ICT savvy and have limited capital to invest in software development and infrastructure, as long as you have internet access and you know how to use the internet.
Some of the factors that encourage entrepreneurs to start their own bitcoin mining business could be that the business is easy to set up and the startup capital is indeed affordable; you can actually start your own bitcoin mining business from the comfort of your house. All you need to do is to create an office somewhere in your house. You don’t necessarily need to see the people you are doing business with since you can transact bitcoin mining business with clients from any part of the world.
Lastly, starting a bitcoin mining business requires professionalism, advanced mathematics skills and a good grasp of how cryptocurrency and the digital payment system works on a global platform. Besides, you would need to get the required certifications and license and also meet the required standard for such business before you can be allowed to start a bitcoin mining business in the united states.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require the services of bitcoin miners are not restricted to bitcoin exchange and trading companies cum bitcoin traders, people and organizations that make online transactions in your immediate community or state, but it cuts across people on the cyber space who make use of bitcoins from all over the world. This is so because bitcoin is a cryptocurrency and a digital payment system used basically on the internet hence the leverage to work for people and organization all across the globe.
So, if you are looking towards defining the demographics of your bitcoin mining business, you should make it all encompassing. It should include bitcoin exchange and trading companies cum bitcoin traders, programmers, investors, and internet – business oriented people and organizations within and outside the United States.
3. Decide Which Niche to Concentrate On
Most bitcoin mining companies tend to operate the general bitcoin mining business that a standard bitcoin mining poll/company is expected to offer, that is why it seems like there are no niche areas in the industry. But on the other hand, some bitcoin mining company may decide to major in some key areas such as;
- Bitcoin cloud mining
- Bitcoin cloud hashing
- Providing other related bitcoin, cryptocurrency and digital payment system consulting and advisory services
The Level of Competition in the Industry
The level of competition in the cryptocurrency and a digital payment system industry does not in any way depend on the location of the business since most people that mine bitcoin can operate from any part of the world and still effectively compete in the bitcoin mining line of business cum cryptocurrency and a digital payment system industry.
When it comes to bitcoin mining, distance is never a barrier when competing for clients especially international clients. What most clients want is result, hence they are ready to make use of bitcoin miners or bitcoin mining platforms no matter the part of the world they operate from as long as they have good track record and can deliver excellent results when it comes to mining and selling bitcoins to them.
There are several bitcoin miners and bitcoin mining pools scattered all around the United States and in the cyber space. So, if you choose to start your own bitcoin mining company in the United States, you will definitely meet stiffer competitions not only amongst bitcoin mining companies in the United States, but also all over the globe especially if you choose to specialize in cryptocurrency and digital payment system.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for the results they deliver.
These are some of the leading bitcoin mining companies (bitcoin mining pools) in the United States of America and also in the globe;
- AntPool — 17.82%
- DiscusFish/P2Pool — 16.49%
- BitFury — 16.4%
- BTC China Pool — 13.74%
- BW Pool — 7.68%
- Eligius — 4.83%
- KnCMiner — 4.27%
- Slush — 4.08%
- 21 Inc. — 3.79%
- io — 1.99%
- Unknown — 1.9%
- Unknown entity — 1.42%
- BitClub Network — 1.33%
- 8baochi — 0.85%
- BitMinter — 0.76%
- Kano CKPool — 0.66%
- Unknown Entity — 0.66%
- Solo CKPool — 0.47%
- org — 0.47%%
- Unknown Entity — 0.28%
Economic Analysis
As an ICT aspiring entrepreneur who is looking for a business that requires programming and mathematics skills and perhaps minimal startup capital to start, then you can consider starting a bitcoin mining pool. The cost of running a standard bitcoin mining pool when compared to the turnover you get can be poles apart (this is applicable when you have been able to establish your feet in the industry).
Entrepreneurs that venture into the bitcoin mining business can as a matter of fact start the business from their home and still make headway in the business. One thing is certain when it comes to the bitcoin mining business and most internet based businesses, you are sure of making profits when you successfully produce results that are measurable.
As a matter of fact, the cost of running the business from start to finish could be restricted to the cost of making phone calls, transportation and internet subscriptions, PR and of course bitcoin mining and hashing hardware and software et al.
5. Decide Whether to Buy a Franchise or Start from Scratch
When it comes to starting a business of this nature, it will pay you to start from the scratch as against buying a franchise. First and foremost, it is your ability to mine or hash bitcoin that matters not a brand name. Except you want to join a well-established bitcoin mining pool that fits into your business ideology.
Unfortunately, you can hardly find a franchise of a bitcoin mining pool – company to purchase meaning that if you want to own a bitcoin mining (pool) business, then you must be ready to start from the scratch. This is so because the business is easy to start if you have the required expertise and it is still pretty much thriving and there are loads of opportunities available to aspiring entrepreneurs that are interested in the industry.
The truth is that it will pay you to start your bitcoin mining company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.
Please note that most of the big and successful bitcoin mining companies around started from the scratch and they were able to build a solid business brand.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own bitcoin mining business today, one of the major challenges you are likely going to face is the presence of well – established bitcoin mining companies who are offering same services that you intend offering. The only way to avoid this challenge is to create your own market.
Some other threats that you are likely going to face as a bitcoin mining company operating in the United States are hosting issues, installation or upkeep troubles, heat, unfavorable government policies, and global economic downturn which usually affects purchasing/spending power. There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Generally, you have the options of either choosing a general partnership, limited liability company which is commonly called an LLC, or a sole proprietorship for a business such as a bitcoin mining company. Ordinarily, general partnership should have been the ideal business structure for a small – scale bitcoin mining business especially if you are just starting out with moderate startup capital.
But people prefer limited liability Company for obvious reasons. As a matter of fact, if your intention is to grow the business and have clients both corporate and individual from all across the United States of America and other countries of the world, then choosing general partnership is not an option for you. Limited Liability Company, LLC will be highly suitable for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your bitcoin mining (pool) business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your bitcoin mining business, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
8. Choose a Catchy Business Name
Generally, when it comes to choosing a name for a business, it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own bitcoin mining company, here are some catchy names that you can choose from;
- Mole Hill Pool — 12.22%
- Discus Fingerling/P2Pool — 13.25%
- Bit Classic — 13.40%
- BTC Silicon Valley Pool — 16.14%
- BDC Pool — 10.20%
- Mike BTCs — 22.88%
- Knuckles Miner — 66.27%
- Math BTC — 34.08%
- L Way BTC Inc. — 6.39%
- Commodores BTC — 4.77%
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your bitcoin mining business.
Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own bitcoin mining business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own bitcoin mining business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
11. Get the Necessary Professional Certification
Apart from the results you produce, professional certification is one of the main reasons why most bitcoin mining companies stand out. If you want to make an impact in the Bitcoin industry, you should work towards acquiring all the needed certifications in your area of specialization. Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in this competitive market.
These are some of the certifications you can work towards achieving if you want to run your own bitcoin mining company;
- Certified Bitcoin Professional (CBP) | Crypto Currency Certification
- Blockcerts Certification
- Cryptocurrency certification
- Ethereum certification
- Blockchain professional certification
12. Get the Necessary Legal Documents You Need to Operate
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own bitcoin mining business in the United States of America;
- Certificate of Incorporation
- Business License and Certification
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract documents
- Online Privacy Policy Document (basically for online payment portal)
- Company Bylaws
- Memorandum of Understanding (MoU)
- Apostille (for those who intend operating beyond the United States of America)
13. Raise the Needed Startup Capital
Aside from the amount required to purchase bitcoin mining software and hardware, bitcoins and of course cryptocurrency and other forms of digital payment required to trade with, starting a bitcoin mining business can be cost effective especially if you choose to run the business from your home, share office space with a friend or make use of a virtual office. Securing a standard office is part of what will consume a large chunk of your startup capital, but if you choose to start the business on a small scale, you may not have the need to go source for fund to finance the business.
When it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your bitcoin mining/trading business;
- Raising money from personal savings and sale of personal stocks and properties
- Sell of shares to interested investors
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
14. Choose a Suitable Location for your Business
Bitcoin mining business and most internet service based type of businesses do not require that you see physically with your clients, hence the location you chose does not necessarily need to be top-notch.
But the fact that you can operate your bitcoin mining business from your home does not mean that location has little influence on the success of a bitcoin mining company. If you have taken your time to study the bitcoin mining and other internet based businesses, you will realize that they are willing to pay expensive rents in order to stay in an ICT hub; a place with pretty strong internet network and of course a place where ICT activities are at its peak.
It is important to note that a business facility in a good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget. If you are new to the dynamics of choosing a location for a business such as bitcoin mining business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your company.
So, if you are looking for a location for your bitcoin mining company, ensure that it is a place that is located in an ICT hub; a place with pretty strong internet network and of course a place where ICT activities are at its peak. Of course, you would not want to locate this type of business in the outskirts of town or a place without strong internet network. Your clients should be able to drive down and locate your office with little or no difficulty.
15. Hire Employees for your Technical and Manpower Needs
In order to successfully launch a bitcoin mining business, you will definitely need bitcoin mining software apps and hardware such as Application-specific integrated circuit (ASIC) machines and other cryptocurrency and digital payment system related software apps and wallet. So also, you will need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).
When it comes to choosing between renting and leasing an office space, the size of the bitcoin mining company you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a standard bitcoin mining company, then you should consider the option of leasing a facility for your office.
As regards the number of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision. Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Bitcoin Miners and Hashers, Programmers and Software Developers, Business Development Executive/marketing Executive, Customer Service Officer or Front Desk Officer, and Accountant.
Over and above, you would need a minimum of 8 key staff to effectively run a medium scale but standard bitcoin mining company. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high – profile internet based currency consultancy contracts especially from big corporations.
If you are just starting out, you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with other programmers and software app developers and computer engineers that operates as freelancers.
The Service Delivery Process of the Business
It is the tradition in the cryptocurrency industry for bitcoin miners to help keep the Bitcoin network secure by approving transactions. The truth is that mining is an important and integral part of Bitcoin that ensures fairness while keeping the Bitcoin network stable, safe and secure.
In the cryptocurrency and other forms of digital payment system industry, bitcoin miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart process of issuing the currency and also creates an incentive for more people to mine.
For instance, when a block is discovered, the discoverers may award themselves a certain number of bitcoins, which is agreed-upon by everyone in the network. Currently this bounty is 25 bitcoins and this value will halve every 210,000 blocks.
Additionally, the bitcoin miner is awarded the fees paid by users sending transactions. The fee is an incentive for the bitcoin miner to include the transaction in their block.
It is important to state that a bitcoin mining (pool) company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated business cum services process is not cast on stone.
16. Write a Marketing Plan Packed with ideas & Strategies
As a bitcoin mining company, you would have to prove your worth over and over again before you can be awarded any bitcoin mining and hashing contracts from corporate clients. So, if you have plans to start your own bitcoin mining company, it will pay you to first build a successful career in the digital payment system industry.
People and organizations will hire your services to help them handle all their bitcoin mining and hashing needs if they know that they are going to get good returns on their investment.
So, when you are drafting your marketing plans and strategies for your bitcoin mining company, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to the cryptocurrency industry and the organizations you have worked for in time past. This will help boost your chances in the market place when sourcing for bitcoin mining and hashing contracts.
Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet to market their services. In other words, a larger percentage of your marketing efforts should be directed to internet users.
Here are some of the platforms you can utilize to market your bitcoin mining company;
- Introduce your business by sending introductory letters alongside your brochure to all the bitcoin exchange and trading companies cum bitcoin traders, programmers, investors, and internet – business oriented people and organizations within and outside the United States
- Promptness in bidding for bitcoin mining and hashing contracts from bitcoin exchange and trading companies cum bitcoin traders, programmers, investors, and internet – business oriented people and organizations within and outside the United States
- Advertise your business in relevant programming magazines, radio and TV stations (make yourself available for bitcoin mining and cryptocurrency related talk shows and interactive sessions on TV and Radio)
- List your business on local directories
- Attend international bitcoin mining and cryptocurrency related seminars and business fairs
- Create different packages for different category of clients in order to work with their budgets
- Join related associations around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks
- Engage the services of online marketing executives and business developers to carry out direct marketing
17. Work Out a Reasonable Pricing for your Services & Products
Some of the key factors that will help you mine or hash bitcoin in a profitable pricing system is to ensure that you work with highly talented programmers and mathematicians in your bitcoin mining pool. You should also ensure that you get your bitcoin mining software and hardware at good deal not forgetting to run your maintenance as at when due.
Another strategy that will help you offer your bitcoin mining and hashing services at the right price is to ensure that you cut operational and maintenance cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If your intention of starting a bitcoin mining company is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on both print and electronic media and also social media (the internet). As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching.
Another strategy is to sponsor relevant programmer/ICT based programs, TV and radio programs, advertise your business in relevant magazines and newspapers. Below are the platforms you can leverage on to boost your brand and to promote and advertise your business;
- Place adverts on ICT magazines and related newspapers, radio and TV stations
- Encourage the use of word of mouth publicity from your loyal customers
- Leverage on the internet and social media platforms like YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Badoo, Google+ and other platforms to promote your business
- Ensure that you position your banners and billboards in strategic positions all around your city
- Distribute your fliers and handbills in target areas in and around our neighborhood
- Contact bitcoin exchange and trading companies cum bitcoin traders, programmers, investors, and internet – business oriented people and organization within and outside the United States by calling them up and informing them of your organization and the bitcoin mining and hashing services you offer
- Advertise your business in your official website and employ strategies that will help you pull traffic to the site
- Brand all your official cars and ensure that all your staff members wear your branded shirt or cap at regular intervals