Valuation of Cryptocurrency Mining Operations

Authors

  • Jose Berengueres CIT, UAE University

DOI:

https://doi.org/10.5195/ledger.2018.123

Keywords:

Valuation, Net present Value, NPV, discounted cash flows

Abstract

Traditionally, the Net Present Value method has been used to compare diverging investment strategies. However, valuating crypto-projects with fiat-based currency is confusing due to extreme coin appreciation rates as compared to fiat interest rates. Here, we provide a net present value method based on using crypto-coin as the underlying asset. Using this method, we compare buy-and-hold versus mine-and-hold; we also provide a sensitivity analysis of profitability.

References

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Laszka, A., Johnson, B., Grossklags, J. “When bitcoin mining pools run dry.” International Conference on Financial Cryptography and Data Security. Springer, Berlin, Heidelberg, 2015.

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Ledger Volume 3 (2018)

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Published

2018-09-04

How to Cite

Berengueres, J. (2018). Valuation of Cryptocurrency Mining Operations. Ledger, 3. https://doi.org/10.5195/ledger.2018.123

Issue

Vol. 3 (2018)

Section

Perspectives

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