How Much is 2b2t Worth?

2b2t is a Minecraft server with a map that has lasted over 10 years. But have you ever wondered how much the server itself is actually worth? Today, we're going to find out, or at least try to.

0:00 Introduction
1:01 Domain Name
1:33 Server Hardware
3:40 Co-Location
4:28 Priority Queue
5:52 Plugins
6:42 Map
8:02 Misc. Costs
8:12 Total Estimated Value

[SalC]

BEFORE YOU COMMENT - It's likely your question is already answered here:

Q: Dude, your estimate is really low.
A: Yes, it's supposed to be low. The whole intention was to simply get an absolute minimum amount of what 2b2t is estimated to be worth.

Q: You valued 2b2t incorrectly. Why did you ADD the liabilities to the value? Wouldn't you normally subtract them?
A: There is no set way to value a company. Everyone does it differently because in the end, if the server was to be sold, it would be up to both parties to agree on a final price. In this case, I decided to add the liabilities with the idea that you would be also be paying for the investment made into the company. Plus, even if I ended up subtracting those liabilities, it would barely make any change to the final estimated value. Read the disclaimer at 0:57.

Q: The backup server is likely not a physical machine that Hause owns.
A: I got a lot a DMs about this after I released the video with some evidence to prove that the map backup is likely stored on a cloud server. This actually makes more sense as building and co-locating a backup server wouldn't make as much financial or practical sense. Certainly an oversight by me on that one.

Q: 2b2t is worthless.
A: It's not. Change my mind.

[The_Horizon]

I genuinely wonder how hause is doing. They've been extremely silent, in fact we don't even know if Hause is a real person anymore and not just a group. Its so mysterious

[GraySlicerAnimations]

"Welcome back to the oldest anarchy server in Minecraft, which I now own" -FitMC

[soiled_it]

"Yeah I have a millionaire salary."
'Wow! Are you an astronaut? The president? A CEO?'
"Nah bro I just host a Minecraft server."

[Akotski-ysrr]

I never realized how much money just that skip queue thing can make that’s insane

[chocological]

My guess is that the backup server wouldn't be an physical server, rather an enterprise cloud service like Backblaze B2 or Amazon S3. It simply doesn't make sense to purchase and manage a bare metal server machine only for backups (as keeping backups does not require any compute power).

[OwOMoment]

I'll be honest I was expecting the map to be calculated with NFT prices lmao

[staCats]

I feel it'd lose a lot if not all of its value if it's sold because the Admin would probably be more active than Hause is and it would kill the server.

[player_official]

It would be interesting to see a professional firm make an audit on the server.

[SemiHypercube]

In conclusion it's worth: 10+ years worth of thousands of players' creations, destruction, friendships, rivalries, and history. Priceless.

[SylvereNazaire]

The fact that there's the cent sumbol in his glasses, but the final estimate is 1.6M

[finnyjam]

I'd wouldn't say the server is worthless, but priceless. The rich history and impact on minecraft's culture is beyond the maintenance costs

[avidachs]

when you’re valuing an asset, the expenses (server upkeep costs) should be subtracted from the final value, not added

[MateHomolya]

That RuneScape music was totally unexpected, what a rush of nostalgia from 2011.

[ScarlettStunningSpace]

I doubt Hause would ever let go of this server, I know I wouldn't. I think the server would count as art not only because of the map, but for events that happened on the server, milestones achieved, and the culture.

[markwhi]

The server hosting costs are not assets, they're liabilities. If you bought 2b2t that would be your expense to pay, you wouldn't acquire $7200/yr worth of anything.

[HobNob-trnm]

Hausemaster is such a good owner/group ngl. Considering it's a server full of exploit abusing hackers hes done a very good job at keeping information private as well as keeping the server running.

[boejiden]

Great video highlighting the raw asset value, monthly revenues & expenses, etc. $1.6mm does seem very much like a lowball valuation, but for reasons different than you highlight.

What you are paying if you were to buy the server are the raw assets (server hardware, domain name) and all the data on them - all the bits and bytes that make up 2b2t. The first stab at valuation is getting at what's called "book value", or the exact cost it would take to buy this hardware. As you point out, though, this is very much understated since someone replicating the exact hardware setup of 2b2t still doesn't own a server that IS 2b2t; financially this matters because 2b2t essentially has a competitive advantage (network effect) that makes that specific set of colocated hardware more valuable than just the raw off-the-shelf cost to replicate the set up, and this brings us to the next step of the valuation - the earnings power.

As you point out, Hause is (conservatively) raking in around $1.1 million operating profit (i.e. pre-tax) annually. Let's additionally throw on a 33% tax rate and say it boils down to $737k after-tax profit each year. Here is where your analysis goes wrong - you add the $1.1mm pre-tax profit to your estimated auction value for the "art" of the 2b2t map and say the server is worth around $1.6mm. However, you are neglecting that the owner is raking in $1.1mm pre-tax profit EVERY YEAR. You're buying the server for not just one year but forever. So what is that $1.1mm pre-tax ($737k post-tax) profit worth TODAY assuming no growth (nor any decline)? That brings one to the concept of a "discount rate", which is a means of translating future cash flows into a present value.

Again, assuming no growth nor any decline in the profit of the server (i.e. it will generate $1.1mm pre-tax profit // $737k post-tax profit each year, forever) then there are a range of values based on what this "discount rate" is. This is where investing becomes more art than science. Some will say to use the weighted average cost of capital of a business, but 2b2t has no real cost of capital since it presumably can be operated without any debt, thus the only cost of capital is the required rate of return of the purchaser. If I want to earn a steady 10% on the money I shell out for this $737k after-tax profit stream, the value (based on the formula for a perpetuity, meaning a cash flow stream that is constant forever is):

= $737, 000 / 10% = $7.37 million

If there is conceivably some level of growth in the priority queue subscribers (and thus in top line growth) that more than offsets growth in the cost structure then this flows to the bottom line (profit) and one would adjust the valuation for some assumed base level of growth. Look up "growing perpetuity" or "2 step dividend discount" or "Gordon Growth Model" if interested further.

And you could optionally throw on the auction value of the 'art' aspect of the server on top of this, so long as the terms of auctioning the "art" of the server's map do not transfer any ownership rights to the earnings stream of the business. Tbh you could probably get a lot more than $500k at auction if someone set up some kind of vehicle like a DAO and tokenized the "art" of the server map with a crowdsourced auction, like Constitution DAO, and let the masses of 2b2t fans all pitch in a small amount for partial symbolic ownership without any true ownership, but I think this is a very scummy thing to do and hope it never happens.

Source: professional investor

[hystereo]

It seems like HauseMaster has made his best investment in his life, keeping 2b2t alive for all those years, the fact that he probably could made $100.000 USD a month is just mind blown to me, but also makes sense since he got huge bills monthly for the server to even run.

[flre]

Man, I had no idea THAT MANY people had priority queue. I thought it was a couple hundred at most. Crazy how popular this one server is.