Play the long game
Bolt Miner Updates Nov 30th 2022
Bolt Miners -
There’s been no shortage of crypto drama since our last post and the mining industry has been no exception. The combination of a retreating BTC price and climbing hash rate put miners in a squeeze only to be exacerbated by the antics of SBF, or Sam Bankman-Fraud as we like to refer to him around the mining water cooler… We’ve gotten a lot of great questions from many of you as the news of bankrupt exchanges and failing mining companies has stoked fears of contagion and overleveraged counterparties. So we wanted to check-in with a quick update and perspective on the market.
Play the long game
Crypto mining is not for the faint of heart. It requires a sizable financial commitment and conviction in the long-term success of Bitcoin (and other coins) to avoid the pitfalls of irrational exuberance and despair. As miners who got started in late-2016, our team was afforded the opportunity to experience the boom and bust of the 2017-2018 cycle when getting rekt was limited to fireselling a handful of GPUs and S9s. That experience led to a strong belief in sustainable business practices including minimizing leverage, securing a fixed cost of power and dollar cost averaging our way into mining hardware purchases – beliefs that have positioned Bolt with a $0 debt balance sheet and multi-year fixed power agreements that will continually advantage and protect Bolt Miners. Below are a few recent podcasts on this topic from industry leaders like Riot Blockchain and our partners at Luxor that I think every miner should listen to.
Rig pricing
Speaking of opportunities. While the market for hosting rates broadly has moved up, we are excited to announce we are dropping our rates to $0.0849/kWh when you buy new rigs with us and $0.0859/kWh for new hosted rigs. At these rates, there remain several highly profitable rigs as hardware producers continue to invest in higher efficiency rigs for an increasing breadth of protocols. We encourage you to think long-term and check out our specials at Bolt’s marketplace.
Not your keys, not your coins
If we’ve re-learned anything lately it's that centralized exchanges are risky. Some of you may recall that we shared some recommendations for keeping your coins safe back in our January newsletter. We thought now was as good a time as any to re-post those recommendation for the benefit of the Bolt Miner community:
There’s a wide range of wallet solutions that range from easy-to-use web based “hot wallets” on exchanges, to offline “cold storage” solutions for the more technically inclined HODLER. While we prefer cold storage using a hardware wallet, we believe that the most secure wallet is one that you feel most confident managing. Managing your own private keys isn’t for everyone — there’s real merit in simple, third party solutions like Gemini Custody.
Below is our recommendation for those of you interested to self-custody your coins using a hardware wallet:
Ledger Nano X setup with a 25th word passphrase for extra security.
2x Seedplate stainless steel backup -- store one securely in your home, preferably in a fireproof safe, and the second at another location, such as a safety deposit box.
Keep a small amount of BTC like a "checking account" on the partition of the Ledger wallet that isn't backed up with the passphrase. Send your mining proceeds to the partition that is backed up with the 25th word. This is a best practice to avoid easily succumbing to a $5 wrench attack.