Who Invests in Cryptocurrency?
When it comes to investing in cryptocurrency, the assumption is often that it’s a young person’s game.
In fact, just mentioning the word crypto may conjure images of teenage tech-heads pulling all-nighters and drinking energy drinks. However, the reality of who invests in cryptocurrency could not be further from this.
An American study into the most well-known cryptocurrency, Bitcoin, found that the average age of investors was 42. In fact, the demographics for Bitcoin investors were broadly identical to the profile of the average investor across political affiliation, income and even gender.
Now, it’s important to make a few qualifying points. Firstly, it is an American study and, secondly, it only looked at Bitcoin investment, not cryptocurrency as a whole.
The latter point is particularly important, as Bitcoin is just one of the hundreds of coins out there and, while it is the most well-known, it may not be the best coin to invest in, depending on your circumstances.
Still, what this study does demonstrate is that the average investor in cryptocurrency is no different to the average investor in stocks, property or business. This reflects our own experience of cryptocurrency investors in the UK. So, with that in mind, who does invest in cryptocurrency?
One of the most common types of investor to cross over into mining cryptocurrency is the property professional; the reason being that property and cryptocurrency have a lot in common.
In fact, property and cryptocurrency both have three key similarities:
- Investing in both involves putting capital into an asset.
- Investors in both property and cryptocurrency understand the benefits of receiving a passive income.
- Both investment types are capable of growing in value over time, until the time is right to sell.
In property, this means buying a building, filling it with tenants and one day selling it for more than you paid for it.
When it comes to investing in cryptocurrency, the asset you invest in is a mining rig. This is a high-powered computer that allows you to generate your own crypto coins or tokens, each of which has a monetary value.
These coins produce a passive income, but can also increase in value over time. Choose the right time to sell, and you can make a great profit on your coins, just as you would with a property.
The best bit is that cryptocurrency produces this income all day, every day and your mining rig will never miss a rent payment. Just plug it in and you can enjoy the equivalent of a virtual tenant that will never let you down.
Even better, crypto mining rigs are not picky about where they live. That means they can be used to further monetise your property portfolio in a variety of ways.
For example, you may be renovating one of your properties and be frustrated that you’ll not see an income from it for a number of months. While renovations are taking place, you can run mining rigs in the property to generate revenue.
Similarly, if you have properties with unused space, such as a basement or spare room that cannot be rented, you can use this space to house your rigs. Not only does this provide you with an extra revenue stream, but the excess heat can even help keep energy costs down.
Of course, it is all well and good saying you’re going to generate revenue, but what does this look like? While it is important to appreciate that returns can vary, we ran a test to see what revenue you could generate from a single mining rig in a year.
We found that assuming you’re not VAT registered, you could generate £5,900 in cryptocurrency (after you account for running costs) off a £10K rig.
This equates to a 59% ROI in your first year but, of course, you will use your rig to mine for far longer. It is also important to remember that there is residual value in the rig itself, which can always be sold to recover a significant portion of your investment.
When you consider all these elements, it’s easy to see why many property investors choose to get involved in cryptocurrency.
Cash flow is the bane of every business owner, so the prospect of regular income from cryptocurrency is an attractive one. Even better, though, is that the equipment you need to mining cryptocurrency is VAT deductible.
This means your business can invest in cryptocurrency for less, which drastically reduces the risk of the investment. How, you ask? Let’s explain.
Say your business buys a six-card, top of the range crypto mine for £10k. Recovering the VAT on this takes the price down to £8333, but the price doesn’t have to stop dropping there. Depending on your company, you may be able to write it down as a capital asset, meaning the cost could drop again to £6750.
From 2018 to 2019, we ran a test to see how much revenue one of these machines could generate and found that even in a slow market, we mined £5,900 in cryptocurrency, after paying for the energy to run the machine.
For business, this means that you could see a potential 91% return on investment in your first year, and that doesn’t even take into account the value of the machine itself, which you can always resell to recover a significant amount of your investment.
The returns discussed so far have been based on a relatively conservative mining strategy. That is to say, we did not target higher risk coins in an attempt to achieve even greater results.
However, for businesses who are less risk-averse, cryptocurrency mining allows you to target potentially higher value coins. In this cryptocurrency mining is a truly flexible investment, as it allows for multiple strategies.
You could mine a well-known coin that is seen as a “safe pair of hands” or take a risk and mine a new coin in the hope of a big payday.
Whatever you choose to do, the versatility that comes with crypto mining makes it a great alternative to traditional investments like stocks and shares.
Plus, unlike stocks and shares, your investment isn’t fixed. The fact that your money is in the equipment that mines the coins means you don’t lose it all if you put your faith in the wrong coin. Instead, you can just mine something else.
Finally, if you like to spend your time analysing the market to make smart investments, cryptocurrency gives this to you. You can predict the rise and fall of cryptocurrency as you would with normal stocks, so stepping into the world of crypto shouldn’t feel like stepping that far out of your comfort zone.
When you take all that into account, cryptocurrency mining for businesses becomes a great investment option.
Energy Suppliers and Farmers
The Government’s goal for renewable energy production is to produce 20% of electricity in the UK by 2020. In order to help further this goal, people and organisations across the country have invested in green energy themselves, with the idea of selling excess energy back to the national grid.
However, the tariff for this energy has fallen drastically, meaning the revenue you can generate from selling this energy has dropped significantly.
Crypto mining offers an alternative way to make money from your energy production. Instead of selling all your energy, you can use some of it to power your crypto mines.
This has been shown to produce a significantly greater return for energy producers, as seen here.
For example, current energy tariffs range from anywhere between six and twelve pence per kilowatt. Between April 2018 and April 2019, we found that if you were powering one of our mining rigs and sold your earnings at the end, you would have effectively been earning up to 40.9 kWh.
While historical figures are no guarantee of future earnings, the difference in returns between using an energy tariff and powering mining rigs are certainly marked. Therefore, cryptocurrency mining is certainly an option for energy suppliers that should not be ignored.
Perhaps one of the more surprising inclusions on this list is farmers, who you may expect to be more at home growing produce than growing a digital crypto portfolio.
However, we’ve included farmers for one key reason — they have a lot of spare space that could be home to crypto mining rigs. More space means more rigs, which, in turn, can reduce your return on investment and reduce investment risk. This is called running a mining farm.
The wonder of cryptocurrency mining is that once your rig has been plugged in, you don’t have to spend any time managing it. Just leave it running on a shelf in a dry, sheltered environment and it’ll work 24/7 to generate revenue for you.
Even the by-products of crypto mining can help you improve your profitability. With a greater number of rigs, you’ll find that you have waste heat, which can be used to reduce energy costs and keep cattle and barns nice and warm.
As you will have seen from this blog, investors in cryptocurrency don’t need to be experts in the technology. In fact, some of the most successful crypto investors would class themselves as technophobes.
This is for the simple reason that, just as you don’t have to understand the ins and outs of how a bank works to make an online transaction, you don’t need to know everything about the technology to get involved in cryptocurrency.
In fact, at its simplest, you can get involved with mining cryptocurrency in just three steps:
- Buy your machine: Choose you’re specification of machine and make your purchase. If you’re not sure what you should be buying, speak to us for an expert opinion on what makes a great crypto mining rig.
- Plug it in: Mining rigs may be high-tech computer equipment, but that doesn’t mean you have to spend hours installing software. Our rigs are designed to plug in and work, so all you need is a safe space, a spare socket and internet access.
- Have it managed remotely: If you want a truly hands-off investment, you can have your machine managed remotely by cryptocurrency experts.
Of course, if you do have questions, it’s important to get them answered as quickly as possible, which is why we’re on hand to help you understand what you could gain from investing in cryptocurrency.
So, if you want to discover more about crypto, get in touch with our team to learn everything you need to know. Alternatively, check out our video on whether money-making machines are really too good to be true.