E278 How to Probate a Bitcoin Miner’s Estate
How do you probate a Bitcoin miner’s estate? We’ll cover: what a miner looks like, whether to keep the miner running through probate, and how miners will probably have yet another wallet to figure out.
The Bitcoin mining machine
The word “miner” can apply to the individual who engages in active mining or to the device itself. Confusing, right
Did the decedent own a miner? A miner is a supercomputer dedicated to solving complex math problems to earn Bitcoin. The process of solving those math problems is what makes the Bitcoin network secure.
This machine is not an ordinary laptop or PC. The miner itself looks like a prehistoric computer or heater, and often worth at least $10,000! Executors – make sure you Google what it looks like! You don’t want to accidentally throw away Uncle Bob’s “large old computer…” It could also be mistaken for a space heater, because it actually does throw off a lot of heat.
Keep in mind that the decedent could own a hosted miner. Because the machines are huge, hot, and noisy, people may not want to keep them in the house. Instead, there are miner “farms” that handle the cooling, electricity, and noise reduction. This allows shelves upon shelves of miners to be in one place and under the right conditions. A decedent may own a machine at a hosted facility and pay rent for the facility to provide those solutions.
Running a Bitcoin miner throughout probate
Should the executor continue running the Bitcoin miner throughout the probate process? As we know, probate can take a long time. Running miners for a year or more could generate significant income. You need to do a cost-benefit analysis. Do you unplug the miner and sell it or keep it running?
Just like any other operating business, don’t over–think it. Does the executor have the capability to keep running the miner, or is it better to sell it immediately? For example, an executor is not equipped to continue running a retail store for an estate, so it’s better to sell quickly. But an executor could maintain a rental property until ready to sell.
So, if you have a hosted miner, it may be easy enough to pay the miner farm rent to keep it running. But, if the machine is in the decedent’s home, you probably don’t want it there while you are preparing to sell the home.
Some factors to take into account are:
- Electricity cost vs. revenue. It takes a lot of power to run the machine. If you are spending a lot of money on electricity and the current price of Bitcoin doesn’t justify it, the executor may want to sell.
- Risks: If one of these machines blows out in the home, it could cause problems. If the machine itself is worth $10,000 and it blows out, then the heirs lose that money.
Another Bitcoin wallet
We’ve talked about wallets that executors may miss (https://anthonyspark.com/e270-3-Bitcoin-wallets-executors-overlook/), and miners may have another one! The miner’s earnings usually have to go through a “pool” before it gets to the wallet.
It’s hard to win the calculation contest at home on your own little device, so many people join pools where miners combine their computer power and divide up the earnings. Because of that multi-layered setup, you may need to find yet another seed phrase for another wallet.
Hopefully this is a good overlap of probate experience with bitcoin miner knowledge. My book, “How Probate Works,” will show you how probate works in general. I don’t have a Bitcoin chapter yet, but you will get a sense of how the probate process applies to your situation.
As always, if you have questions about Bitcoin and probate, let us know!
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