Large mines, what do they do with all the bitcoins

[Brasgaard]

Hello.

As the title says; What do they do with all the bitcoins they mine?
Do they keep them? Or waiting for the price to raise so they can sell them.
Selling them each week/month to pay the bills or?

And how come some offer the service "Cloud mining"?
Isn't it more profitable for them to just use the mining-machines themselves and then sell the bitcoins on the market?
I'm very much interested to hear how it operate / takes place in these mines and what they do.

Thanks in advance.

[Korbman]

Overall it's preferable for larger mines to regularly liquidate any Bitcoins that they mine in order to cover expenses. For example, if your mine costs $10,000 per month to operate (between building / maintenance costs, cooling, staff, and electricity), you can't (yet) pay all those in Bitcoin. With that semi-fixed expense, the company would need to mine at least BTC44 ($230 per coin at the time of writing) to break even by month's end.

But, that's assuming the price doesn't drop or increase...which obviously has an effect on how many coins are needed to reach that break-even point. Selling coins as they are earned guarantees the company predictable revenue for that day (or hour, week, etc) instead of gambling on whether or not the price will increase over time.

[sidehack]

Cloud mining offsets a lot of the delayed return on equipment. They buy the gear and plug it in, then you pay them a lump to operate it; said lump covers a lot of their down-payment on the machine and now they don't have to worry about outlying costs being paid back in a trickle. Basically, customers like cloud mining because it reduces the effort they have to put in, and clouds like it because it offsets a lot of the financial risk onto the customer.

[alh]

Most large mines have no choice but to liquidate a portion of their BTC income. Salaries, rent, electricity and so forth alsmot always have to be pair in their local currency. It wouldn't surprise me if a large mine has to convert 50% of their BTC to pay expenses every month.

[jtoomim]

http://Toom.im is a 750 kW hosting company with about 200 kW of our own miners and 500 kW of customer-owned gear. We're in the process of expanding to 2.25 MW of capacity. We've got 8 employees right now, a 8000 sq ft warehouse, and a five-digit monthly power bill. We spend a lot of money.

We usually hold most of our revenue as bitcoin. My own primary personal mining address, for example, has never sent any money since I created it. We keep about 1-2 months' worth of expenses stored as fiat. We try to be careful to ensure that, if bitcoin were to crash down to 10% of its current value, we would still be able to pay the majority of our debts and shut down cleanly. A lot of our customers pay us in fiat, though, so typically only about 50% of our monthly expenses get paid by selling bitcoin. Each time we expand, though, we have to liquidate the majority of our holdings in order to pay for transformers, switchgear, etc.

[gentlemand]

I would've thought big miners have ongoing deals to sell a proportion of their coins directly to buyers off market.

Bitpay said most of the coins they handle aren't liquidated on exchanges, they're bought by a group of buyers. In some minds 'fresh' coins are more desirable so the first port of call will be a miner.

[jtoomim]

I would've thought big miners have ongoing deals to sell a proportion of their coins directly to buyers off market.

Most of the coins we sell aren't freshly mined. They're sent to us by our customers.

The premiums for freshly mined coins aren't very large. Typical premiums are around 0.1 btc for a 25 btc block. Those premiums tend to be less for blocks that are not the result of solo-mining, so pooled miners or p2pool miners often don't get as big a premium.