Budgeting a first mining deployment: where the money actually goes

Operators building a first site almost always budget the machines accurately and everything else optimistically. The result is not usually a failed project, it is a project that runs out of money three weeks before it would have started earning, which is the worst possible moment.

What follows is the shape of a first deployment budget. The proportions shift with scale and jurisdiction, but the categories do not.

1. Hardware, and the number that is not the price

Quoted ex works, machines are the largest line. Landed, they are larger still: freight, insurance, duty, brokerage and inland delivery all attach before a machine reaches your floor. Convert every quote to landed dollars per terahash before comparing anything, as in what a Bitcoin miner costs.

Add spares here rather than treating them as an extra. Bought with the batch they share the freight and the customs entry; bought later they are a separate import of a possibly different revision. See maintenance and spares.

2. Electrical works

Frequently the second largest line and the one most often missed entirely. Transformer, main panel, distribution, PDUs, cabling, breakers, earthing, and the utility connection itself if the supply is not already there. On sites needing a new or upgraded connection this can rival the hardware, and its timeline usually sets your start date rather than the hardware's does.

3. Cooling and building works

For air: intake and exhaust openings, ducting, filtration, hot and cold separation, sometimes acoustic treatment. For hydro: the whole loop, manifolds, pumps, filtration, treatment and a dry cooler, which is a construction project with its own lead time, covered in hydro miners compared. Plus whatever the building itself needs: floor, security, fire detection.

4. Network, monitoring and control

Switching, cabling, a stable internet connection with a fallback, and remote power control so a machine can be cycled without someone driving to site. Modest money, and the difference between a fault costing an hour and costing a weekend.

5. The soft costs people forget

• Customs bond, brokerage and import VAT where it applies. In the EU the VAT on a shipment worth six figures is due at the border, recoverable later but payable now. See importing into the EU.
• Permits and planning, and the professional time to get them.
• Insurance on the goods in transit and on the site afterwards.
• Installation labour, which on a hydro site is a specialist trade.
• Legal and accounting for the entity, the power contract and the hardware agreement.

6. Working capital, which is the one that bites

Electricity is billed before mining revenue arrives, and it arrives in a currency you may want to hold rather than sell. Hold enough cash to run the site for several months with no revenue at all. Operators who skip this end up selling coin at the worst moment or, worse, selling machines.

7. Contingency

Ten to fifteen percent on a first build is not padding, it is the observed rate at which a first site surprises its builder. If it goes unspent, it becomes spares or the next tranche.

Sequencing the spend

Power contract first, building second, electrical and cooling third, hardware last. That order feels backwards to people who are excited about the machines, and it is the order that stops you storing depreciating hardware while an electrician books a date. Machines sitting in a crate earn nothing while the market moves.