What Is the Risk-Return Profile of a Mining Operation Compared to a Long Call Option?

A mining operation has a high fixed cost (hardware and infrastructure) and high variable costs (electricity), offering uncapped, long-term upside potential, but also significant downside risk of capital loss if the coin price drops or difficulty spikes. A long call option has a limited, known fixed cost (premium), offering uncapped upside potential but with the downside risk limited only to the premium paid.

The option offers a higher leverage and defined risk, while mining is a capital-intensive business with operational risks.