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When it comes to Bitcoin do the Math First, will Ya? $8600, the New Breaking Point.

“What the heck’s a bitcoin?”

That’s what the other person asks anytime I find myself in a conversation about the digital currency.

“You buy some expensive computer equipment and then you begin to mine the bitcoin,” I tell ’em, but I don’t really know what I’m talking about.

Easy peasy!

I recently saw a video ad on YouTube where some cryptocurrency miner/CEO type has computer equipment lining the walls of a cave in Uzbekistan or someplace. The guy on the video says the temperature is ”perfect” in this cave to keep the computer equipment cool and that’s why you should buy into the cryptocurrency he’s mining. All you have to do is just click on his website and sign up.

Flakebook

I see Facebook friends talking about mining, too. It’s as if they foresee no problems mining in their own dorm room, so they can pay for their college tuition with all the digital currency they’ll create.

The cost of a bitcoin

During the initial rise of bitcoin people were renting warehouses to mine it. The cost of electricity cost less than the money they were making from creating bitcoins, which equaled profit, but nowadays bitcoin has dropped as low as six grand a coin. It was up past $20,000 in the summer and fall of 2017, so this means it’s smarter to go to a foreign country where electricity is cheaper to mine the stuff.

$8600 is now the breaking point with miners versus costs according to an article on CNBC titled, “Bitcoin ‘miners’ are losing money at any price below $8,600: Morgan Stanley.”

I don’t like math

I’ve failed in business, lost money in the market, and gotten into credit card debt up to my eyebrows all because I didn’t do the math over the years.

I’m a creative writer and I’ve wanted nothing to do with the stuff all my life.

I pay someone to do my taxes while I watch friends of mine do it all on their own all the while risking an audit.

I even opted out of math classes during college because they let me.

Nowadays I’m older and whenever an opportunity like bitcoin is put in front of me I stop and do the math first.

Here’s the logic

Now, logic states that if you start any business without doing the math first you’re doomed to fail.

First you’ll need the cost of the mining equipment, then you add the cost of electricity use every month, now divide it by the price of a current bitcoin on today’s market.

In the end you’ll probably see the math doesn’t work out in your favor, but if I’m wrong here, go for it, guy, especially if you want machines whirring and hissing in your living room to make some “coin.”

Won’t you be my neighbor?

My neighbor’s philosophy is “win big, lose big” and you have to “take risks” to achieve success.

I agree with most of what he says.

He’s a personal trainer and inspires people on a daily basis to better themselves.

The other day he talked to me about “consistency” and what it meant when applied to one’s life and where I only discover ideas like that in a Tony Robbins book he’s out in the world speaking them out loud!

In the past he was a professional MMA fighter and now he wants to open his own gym, so bitcoin has looked like a good option for him to achieve that dream.

I’ve seen him act just like a hedge fund manager buying bitcoin on the “dips.”

He even showed me how to buy bitcoin once, but I still haven’t done it.

When he showed me how to buy, at the time, bitcoin was at $18 to $20,000 and then suddenly it started dropping.

Now, at the time of this writing it’s at $8,000 and the pundits are saying It’s a bounce! It’s going to go up again! but if you take the time to look at, say, the Nasdaq, the market also looks like it’s going to bounce.

What’s that all about?

Learn to trade

You can listen to gurus on YouTube videos talking about bitcoin going to a zillion dollars by 2020 or you can learn to trade.

Once you do you’ll be able to play bitcoin up or down.

It’s hard for people to understand selling stocks on the downside.

It’s much easier to “buy” because it’s so easy to imagine the thing going up like a roller coaster, all the way to the top, but for “selling” you have to understand the different vehicles, the language and the lingo to know how to do it properly and that’s hard, but not impossible to learn.

If you take the time to learn the art of “technical analysis” you can play the rise and fall of bitcoin without ever holding any in some e-wallet website.

Playing short

One book I own is called, “How to Make Money Selling Stocks Short” by William J. O’Neill, the founder of the newspaper IBD, Investor’s Business Daily.

This book will give you great insight on how to understand shorting and how to discover when it’s time to sell a stock.

One other book that can really help you get your head around trading is, “Trading for a Living” by Dr. Alex Elder.

A gamble

If you’re really not interested in learning about financial markets you can just gamble what you can afford to lose.

Only take a small amount of money to the casino with you and when you lose it all, you’re done!

How many times have you been told that when you go on a trip to Las Vegas?

That’s the only way to play bitcoin or digital currencies if you don’t want to read a book and learn.

Now what?

Once you start reading about finances you’ll begin to become more confident and then the next time you see a pundit spout something like, “Buy this cryptocurrency now or lose out!” you’ll be fortunate enough to find you kept your shirt on while others lost theirs.

Disclaimer: These comments represent the opinions of the author and are not financial advice.
The author is not liable for anything and is not responsible for any errors or omissions that may have occurred in this writing.
It is understood the commentary is for educational, informational and entertainment purposes only.
Conduct your own due diligence before entering the stock market, bitcoin or digital currencies. It involves risk and you can lose money!

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