Once I had my sixth friend interested in investing in my crypto mining, changing my payout strategy had to change. At this point in time my miners would mine as much as it could per week and every Friday, I would cash out Ethereum, which is what we are still mining in some compacity. The total amount would be divided by a percentage of how much money everyone invested. In small groups this was fine but even with five people I was starting to split hairs. So given this, I switched to a set amount per person based on the equipment their money had purchased. This is where my kindness hurt me eventually. Everyone that invested in I was quoting them at the top of what they could make, but I didn’t consider several things:
- Thin margins for errors
- Time taken to build rigs
- Power costs (I rent so my energy costs were included. other investors’ power cut into their profit)
- The price of coin going down (didn’t really matter because I am giving them cryptocurrency for payment, market value only matters if investors decide to sell or sell every week)
And over time it bit away at my profits where, at some points, I had to cover additional costs to pay investors because the amount of currency that was mined was not enough to meet the Friday threshold. This is also the cost of taking on a very risky business venture like this. You may completely fail and owe people a shit ton of money. But, so far so good, and that is the attitude that I need to stay optimistic during times of market crashes or mining less profitable cryptos.
Moving forward or if I were to ever start again, I would start at a more modest return rate for investors. This gives you some room for error in case a rig breaks or mining profits fall. This can work in reverse. If performance is good, you can offer to payout people more during those peak times.
People, you earn a lot of money in a truly brief period, but it is important to be realistic. Making a lot also comes with times of losing and spending a lot. Most of the time now I am managing my own expectations, especially investing with other people. Keep in mind, not everyone will have the same drive to get things done or might not be as interested in the ideas you have. So, the drive must be self-sufficient. My concluding thoughts are that if you are patient with your investments and endure the times of drought you will benefit eventually.
If you are considering investing with partners, it is important to encourage them to learn as much as they can. most of the of the people that have invested with me have little understanding even though I have been spewing knowledge to them for over a year! Also, to be introspective, understand how much responsibility you can take on; do you want someone to be looking to you for money? No, so make sure you don’t put too much on your plate.
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