How to Start a Bitcoin Mining Business

Start a bitcoin mining business by following these 10 steps:

1. Plan your Bitcoin Mining Business
2. Form your Bitcoin Mining Business into a Legal Entity
3. Register your Bitcoin Mining Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Bitcoin Mining Business
6. Get the Necessary Permits & Licenses for your Bitcoin Mining Business
7. Get Bitcoin Mining Business Insurance
8. Define your Bitcoin Mining Business Brand
9. Create your Bitcoin Mining Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your bitcoin mining business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out othersmall business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit ourHow to Name a Businessguide or get help brainstorming a name with ourBitcoin Mining Business Name Generator

If you operate asole proprietorship, you might want to operate under a business name other than your own name. Visit ourDBAguide to learn more.

Whenregistering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a bitcoin mining business?

When it first started, Bitcoin could be profitably mined with a home computer. Since 2013, however, mining has become too competitive for computers to provide any real profit. Even the fastest computers aren’t quick enough to find the correct hash first.

Today, Bitcoin mining businesses use application-specific integrated circuits (ASICs) that are specifically made for mining Bitcoin or another cryptocurrency. An ASIC setup that can solve Bitcoin calculations on its own costs about$12,000.

大多数人进入行业的少得多pooling their resources, though. New ASIC miners are available for anywhere from$489 to $3,000. With one of these, business owners can join amining poolwhere members literally pool their resources together. When the pool has a correct hash first, the proceeds are split amongst members.

For even less, business owners can mine through the cloud. In these agreements, business owners lease mining resources from a cloud-based provider and the leased resources are pooled with those leased by other business owners.Bitcoin.comhasplans starting under $200.

What are the ongoing expenses for a bitcoin mining business?

The ASICs needed for mining Bitcoin and other cryptocurrencies use a lot of power. One estimate places the amount of power needed to mine Bitcoin at 215 kilowatts per transaction computed.MarketWatchcharts how much that costs in each state.

Who is the target market?

A Bitcoin mining business serves the Bitcoin cryptocurrency and therefore, the software used must comply with Bitcoin’s standards. Other cryptocurrency miners must comply with the standards of the cryptocurrency being mined.

How does a bitcoin mining business make money?

Mining Bitcoin is akin to participating in competitive auditing. Businesses verify Bitcoin transactions by guessing 64-digit hexadecimal numbers, which are referred to as “hashes.” The first business to guess a hash that’s equal to or less than the target hash is awarded Bitcoin and a transaction fee.

Bitcoin is set up so that the number of BItcoin rewardedhalves over time. This occurs roughly every four years, and no more Bitcoin will be awarded once there’s a total of 21 million Bitcoin. As the reward for Bitcoin decreases, the amount earned from transaction fees is expected to increase.

(Other cryptocurrencies operate differently.)

How much can you charge customers?

The compensation that Bitcoin mining businesses receive is determined by the cryptocurrency. At the time of writing, having a correct hash first netted the winning business 12.5 Bitcoins. Thecurrent exchange ratewas just below $8,000 for 1 Bitcoin, so having a hash would net almost $100,000. Transaction fees in comparison are relatively small.

How much profit can a bitcoin mining business make?

A Bitcoin mining business’ profitability is directly tied to the value of Bitcoin and cost of electricity. When Bitcoin was trading above $20,000 per Bitcoin, this business was highly profitable. As the value of Bitcoin has diminished, so has profitability.

How can you make your business more profitable?

Bitcoin is just one cryptocurrency that business owners can mine.Additional cryptocurrenciesinclude Ethereum, Zcash, Ripple, Monero and others. Which of these is most profitable to mine depends on many factors, including the value, difficulty to mine and projected forecast for each cryptucurrency.

STEP 2: Form a legal entity

The most commonbusiness structuretypes are thesole proprietorship,partnership,118bet金博宝 , andcorporation.

Establishing a legal business entity such as anLLCorcorporationprotects you from being held personally liable if your bitcoin mining business is sued.

You can金宝搏188是什么公司yourself and pay only the minimal stateLLC costsor hire one of the118金宝app for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more aboutstate sales taxand franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to aspiercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting abusiness credit cardhelps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with ourLLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a bitcoin business. Learn more about licensing requirements in your state by visitingSBA’s reference to state licenses and permits.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully.Business Insuranceprotects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face,begin withGeneral Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need isWorkers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

The first people to mine Bitcoin were mostly technology geeks who were intrigued by the cryptocurrency’s innovation. Today, geeks continue to experiment with cryptocurrencies, but they aren’t the only people mining Bitcoin and other cryptocurrencies.

Anyone who wants a primary or side business that provides passive income may be interested in running a cryptocurrency mining business. The work involved can be arranged around other obligations, and the budget required can be adjusted as needed.

What happens during a typical day at a bitcoin mining business?

Running a Bitcoin mining business is mostly hands-off work. As long as operations are running smoothly, business owners need to do little more than check their business’ Bitcoin holdings and the current exchange rate to see if they want to sell.

The most common computer malfunction is overheating, and business owners do need to respond quickly when this happens. Computers that overheat shut down, and they won’t provide any profit until they’re cooled down and restarted.

What are some skills and experiences that will help you build a successful bitcoin mining business?

Mining Bitcoin and other cryptocurrencies requires no specialized knowledge. Nevertheless, business owners should familiarize themselves with the process so they understand what they’re doing. Books, such as,Bitcoin Mining Step by Step, are popular resources on the subject.

Business owners may also want to invest in aUSB Bitcoin miner. These usually aren’t profitable, but they’re helpful when learning the fundamentals of Bitcoin mining.

It’s also important to be familiar with the risks that accompany Bitcoin and other cryptocurrencies. Understanding market volatility is essential when deciding whether to sell mined Bitcoin. Being familiar with the illegal scams and hacks that occur helps business owners avoid becoming victims.John Oliverdetailed some of the biggest risks, including scams.

What is the growth potential for a bitcoin mining business?

Bitcoin mining operations run the gamut from individuals doing this as a hobby to large corporations that have vast resources. An example of a small-scale setup is Geoffrey Welborn’s inexpensive, yet profitable,dorm room operation. A business in Sweden has a much larger operation,maintaining 45,000 computersin a former helicopter hangar.