In today's high-inflation environment, cash is a melting ice cube, and in recent years, it has been losing 8% of its buying power annually. Shrinking yearly—as inflation quietly chips away at its value. $100 today is worth $92 in real purchasing power a year from now, $85 the year after, and so on. It’s a slow, leaky bucket you can’t patch.
Now contrast Bitcoin (BTC): volatile, yes, but with a historical knack for outpacing inflation. In Feb 2020, BTC was $8,600. Feb. 2025 BTC is at $86,000. That's a climb of 58.86% annually.
Kept in Cash, your $8,600 from 2020 would be worth $5,668 today using 8% inflation.
Kept in BTC, your $8,600 from 2020 would be worth $86,000 usd.
Let's discuss an excellent trade for existing businesses where you can flip out of melting dollars, save on taxes, and generate inflation-hedging BTC. That’s the trade Bitcoin mining offers, and it’s not just about crypto hype—it’s about tax-smart, inflation-beating math.
Let’s unpack this with a real example: buying 50 miners, running them for three years, and analyzing how the numbers compare to cash value and taxes. We will break down the deflationary trap of dollars, the inflationary upside of BTC, and a way to use the existing tax code to make this switch efficiently. Most notably, why could this be a good move for anyone, especially business owners and high-net-worth individuals with cash flow and minimal write-offs?
Before thinking you don’t have time to manage another business, understand that mining feels more like a passive investment from an operating perspective but has the perks of depreciation and expenses that offset ordinary income. It's hands-off; a 3rd party handles the miners and the operations to keep them going. All you need to manage is your wallet payouts and pay your recurring hosting (mostly electrical charges) bills.
This article focuses on the economics of the trade.
Spoiler: in three years, you will have a 55% positive gain over holding the cash. It returns similar to that of a real estate project without the complications, oversight, and underwriting.
The Setup: Your Mining Operation
You have excess cash from business income: $300,000 annually from your business, which makes $1,000,000 a year in profit. Instead of letting it sit, you deploy it into mining. You buy 50 miners at $3,500 each, a $175,000 upfront investment. Each miner uses $2,500 in power annually ($125,000 total for 50), and at today’s BTC price of $86000, each unit makes $3,700 in Bitcoin per year—about 0.042 BTC per miner, or 2.1 BTC total across your fleet at today's difficulty factor. You run them for three years; BTC grows at 58.89% annually (with a volatility caveat), while your dollars lose 8% to inflation each year. Let’s see how this goes against keeping the cash and paying taxes at a 30% bracket.
The Dollar’s Deflationary Trap
First, the enemy inflation. At 8%, your dollars aren’t just sitting still—they’re shrinking. Let's take the total contemplated mining ($550,000) investment in dollars over three years, assume we keep it in cash, and pay taxes in a 30% tax bracket.
Over the three years, after paying your taxes and suffering 8% compounding inflation, you are left with 42% of your original buying power on the money you made. In nominal terms, you have $385,000. In real terms, factoring in inflation, it feels like $317,917. You’re down a lot just holding on, and that’s before considering lost opportunity.
Dollars aren’t an asset but a liability in an inflationary world. Like a leaky pipe, they drip value daily. Bitcoin Mining flips that script—trading a depreciating bucket for equipment that generates something with growth potential.
Bitcoin’s Inflationary Edge (With a Volatility Caveat)
Contrast that with Bitcoin. It’s not the smoothest ride—Be ready for gut-wrenching short-term pullbacks—but its long-term trend is upward. Let’s assume 30% annual growth, a conservative appreciation rate historically, given its 58% average over the past five years, with a big asterisk: it’s volatile. An $86,000 BTC today could hit $111,000 in Year 2, (+30%), 145,340 in Year 3. Your 50 miners produce 2.1 BTC annually at today's difficulty factor. Over three years, you stack 6.3 BTC (adjusted to 4.85/with miner difficulty increase), and if that 30% holds its value compounds. By the end of year 3, those mining rewards could be worth $704,899—far outpacing the dollar’s decline. Volatility means it could dip while it marches upward. The key is to stay patient and hold through the dips. The trade-off? Risk for reward. If history is the barometer, it is measured bet. If you think these projections are too bullish, you could cut the projected returns by half, and you would still be ahead compared to holding cash and paying taxes.
The Tax Code’s Secret Weapon: Section 179
Here’s where it gets clever: the tax code isn’t your enemy—if you can use it to your advantage. What about the $175,000 in miner purchases we discussed? It’s considered capital equipment like a truck under Section 179 of the US tax code, allowing a 100% deduction in Year 1 (up to $1.22 million as of 2025). Your $125,000 annual power bill? A straight business expense. That means all your mining rewards in year one are tax-free, plus leftover depreciation against other income. Let’s run it with your $1 million annual revenue business and a 37% tax bracket:
Year 1:
Income: $1,000,000.
BTC rewards: $180,600.
Expenses: $175,000 (miners) + $125,000 (power) = $300,000.
Taxable income: $880,600. Tax (30%): $325,000.
After-tax cash: $555,000.
Mined BTC mined: 2.1 ($180,600 at $86,000/BTC).
Years 2:
Income: $1,000,000.
BTC rewards: $176,085
Expenses: $125,000 (power).
Taxable income: $1,051,085. Tax: $388,901.
After-tax cash: $662,184/year. BTC mined: 1.575/year ($176,085 at $111,800/BTC).
Years 3:
Income: $1,000,000.
BTC rewards: $171,645
Expenses: $125,000 (power).
Taxable income: $1046,645. Tax: $387,258.
After-tax cash: $659,360/year.
BTC mined: 2.1/year ($305,214 at $145,340/BTC).
The 3-Year Payoff: Cash vs. Mining
In three years, without mining, your contemplated mining investment of $550,000 of hard-earned income is worth, in nominal terms, $385,000 after taxes. In terms of real buying power, you have $317,900.
In three years with mining, you have successfully wiped out $165,000 in taxes and $73,308 in inflation melt. Plus, you have generated $704,899 in BTC. It's a $391,000 positive swing.
Why It Makes Sense
Mining isn’t gambling—it’s arbitrage. Dollars melt; BTC’s a wealth generator. You’re not betting on crypto—you’re using excess cash that’s depreciating to accumulate an asset with upside, subsidized by tax breaks. Section 179 turns miners into a tax shield, and your power bills trim your liability. Expect explosive, volatile growth. For existing businesses with substantial annual income, this investment isn't a stretch, it’s a redeployment. It's a new line of operations outsourced to a third party. It's business investing. Its expansion without the accompanying resource load. It's hard to find a substantial return on capital with such a small operational resource requirement.
Legal Disclaimer
Digital Bridge Mining LLC is not offering or soliciting to sell securities through this document. The information provided herein is for informational purposes only and pertains solely to the sale of mining equipment and hosting services. This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, nor should it be construed as investment advice or a recommendation to engage in any investment activity.
Digital Bridge Mining LLC is not a tax advisor. The information contained in this document is not intended to provide tax advice or to address the specific tax circumstances of any individual or entity. Readers are encouraged to consult with a qualified tax professional for advice tailored to their particular situation.
All numbers, figures, and values stated herein are estimates based on current information as of February 27, 2025. These estimates are subject to change and are provided for illustrative purposes only. Digital Bridge Mining LLC does not guarantee the accuracy of these estimates and makes no representations or predictions regarding future prices, values, or market conditions. Past performance is not indicative of future results.
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