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    I’m cringing pretty hard at the guy walking through puddles right next to racks and racks of exposed power cords.

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      How does this work? If bitcoin is currency, and you are printing currency, why not spend the currency yourself rather than selling the currency to someone else (which must be below face value). This means that the miner is hedging that the cost of bitcoin will drop to below whatever they are selling it as. (My financial acumen is pretty low)

      Seeing the answers below I am clarifying my question:

      If you have the hardware to mine bitcoin, why aren’t you mining the bitcoins for yourself? It looks like these folks are selling a service to mine bitcoins. So they spend $X on electricity and infrastructure to mine $Y in bitcoins. By selling the bitcoins they can make $Y - $X profit. I got they impression they were rather charging $Z (which has to be < $Y) to others to mine the bitcoin for them leaving $Y - $Z on the table.

      Perhaps I have misunderstood all this.

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        • Bitcoin is a notoriously volatile commodity, varying by over 10% in the last week alone. RMB is stable.
        • If they mined bitcoin for themselves they’d still need to convert it to RMB anyway, which has its own costs and hassles.
        • Many people who hold bitcoin do so under the assumption that the price is going to go to the moon, so subjectively value it much higher than miners.
        • In a gold rush, sell shovels.
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          In a gold rush, sell shovels.

          Came to post exactly this ;)

          I think mining on contract is a brilliant hedge. If you’re bearish on cryptocurrency (like me), you can structure your agreements to pay for the equipment quickly and take a low but steady return.

          If it keeps going up uP UP your return steadily increases, albeit slowly - and you can get more customers. If it tanks, you’ve made steady profit and you can try to offload your gear on eBay.

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            Many people who hold bitcoin do so under the assumption that the price is going to go to the moon, so subjectively value it much higher than miners.

            This part doesn’t make sense. No matter what any individual subjectively values bitcoin at, they’re going to be paying market price. Miners can sell at market price and hodlers can buy at market price. There’s no “arbitrage” opportunity from transferring to hodlers directly, because if they can get it cheaper from an exchange, they will.

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              What the above posters are saying, and I agree, is that miners are folk who don’t believe in bitcoin as an investment AND can’t be bothered to sell the coins at current market value. They would rather get cold hard cash right now, even if it is at a discount. Their market is people who do believe in bitcoin as an investment but can’t be bothered to setup the infrastructure themselves.

              For this market to work, the customers have to get a discount (or hedge) on the bitcoin price and the miners believe the discount/hedge is less than the value of the hassle they would have to go through to sell the coins on the open market.

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                It’s worth calling out that mining costs electricity, the price of which is highly variable around the world.

                Large-scale miners are almost universally operating where they can get electricity cheaper than their customers.

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            Bitcoin isn’t currency. It behaves much more like a commodity asset.

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              Because to buy mining hardware and electricity, they need to use RMB.

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                Right mouse button? I’m confused.

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                  Yuan. There’s very little you can actually buy with BTC, so most people instead sell BTC for dollars/pounds/shekels/yuan and use that instead.

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                    Ah, gotcha, thanks. Thought maybe I was whooshing on a joke. :)

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                Edited to reflect your clarification:

                Electricity is far, far cheaper at these remote hydroelectric dams than in the cities. It’s worth mining BTC where electricity is cheap.