What is Break-Even Point (BEP)? | CryptoWallet.com

What is Break-Even Point (BEP)?

The Break-Even Point or BEP for short is a financial term used to express when the total costs and total revenue positions are the same. BEP is a numerical value that expresses a position from which there is no profit or loss, as all expenses are covered. BEP is also closely related to the financial concept of the ‘Breakeven Multiple.’

The Break-Even Point is a useful insight for a variety of different financial actors, from Technical Analysts, crypto traders, to accountants and crypto miners. The BEP point is a useful means of understanding the financial position of an asset. Informing about one of its place amongst a portfolio. 

BEP is a position of balance and by its nature not one of profit. It is a balance of both operation and revenue, however, BEP can still be a good indicator of the potential of an asset. If an operation is capable of meeting its BEP position then it is quite possible that it may ‘break out’ of the Break-Even Point and move into a position of profit. 

Cutting Costs Can help You Degree Your BEP

The BEP position is best understood as an interrelation between both revenue and expenditure. Therefore if the expenditure was to increase for various reasons, the ‘balance’ of a BEP position is going to be thrown off. Different assets will have different BEP positions depending on the specific nature of the operation and will run different levels of operating costs. Keeping this in mind it is possible to maintain a very valuable asset that is nonetheless running at a loss due to high levels of cost. 

For example, Crypto Miners often employ BEP positioning to better understand the interaction between their operating costs and the potential for profits. Crypto-Mining is often a costly endeavor, with costs associated with energy usage, hardware maintenance, and replacement of materials. Due to this turning a profit can be a complex operation and as such the cutting of operating cost, if possible is integral to meeting the Break-Even Point for this operation.