For crypto and bitcoin mining operators the adage, “It takes money to make money” is essentially evolving into “It takes crypto to fund the mining of more crypto”.
With the growth of the cryptocurrency industry, more and more bitcoin and cryptocurrency mining business owners are leveraging their own cryptocurrency to help fund and expand their mining operations. Once a mining business begins to see success, it may be time to consider expanding the business. And the loan options to enable them to do this are growing.
- To pay electricity bills and power supply – Cryptocurrency mining takes energy and power – lots of it. Many medium and large commercial mining operations are able to negotiate their power needs in annual or multi-year contracts with providers, and while locking in a price can create a sense security, it can be an expensive up front cost, with potential crypto price volatility creating additional risk exposure for mining operators.
- To fund employee payroll – Like all businesses, mining operations rely on human employees, and those employees rely on the business contract of being compensated in full and on time. Mining operations who rely on their team members must be prepared to fund payroll as well as any negotiated salary increases or team expansion to grow. Having ample capital for growth can help retain talented mining employees, which are the heart of successful crypto mining operations.
- To expand operations, infrastructure, recruitment, marketing, etc. – The long-term growth of a mining operation requires capital. With great planning and foresight, a mining business owner can use capital towards operational and infrastructure, improvements, opening a new facility, recruiting a talented team, or getting the word out about their business.
While expensive, mining operators with keen foresight will find that investing in these 3 key areas can prove worthwhile for the long-term growth of their mining business.
So, how can a crypto mining operation use its own crypto for capitalization?
Crypto mining operations have the flexibility to use their own crypto, earned from their own mining, towards a crypto-backed loan, with the benefit of receiving funds directly without having to sell their crypto.
For example, DrawBridge Lending offers commercial and individual non-recourse loans on secured bitcoin held in storage to Accredited & Eligible Contract Participant (ECP) Borrowers with no margin calls and no rehypothecation on bitcoin collateral.
Additionally, DBL’s loan products are offered in short-term tenors (1-6 months), and at sub 3% APR interest rates.
The great part is that crypto miners can retain the ownership of their coin in cold storage without having to sell it. And should the value of crypto go up in the future, the upside potential realized on this loan option is particularly beneficial.
If you have any questions about how DrawBridge Lending can be a partner to your mining operation or if you want to know more about our loan products, we invite you to reach out to our team today!