What causes the popularity of mining
New BTC coins come into circulation thanks to mining. The mining process not only confirms transactions, but also operates the entire blockchain. Mining is a kind of competition to solve a “mathematical problem. Whoever finds the answer first wins the prize. After that, the cycle will restart.
Not only does mining remain popular, but in the long run it’s growing. Enthusiasts are not intimidated by the losses that can be caused by volatility, labor costs, and volatile income. Too many opportunities offered by mining compared to other sources of income. The growing popularity is evidenced by the gradual increase in hash rate on the network.
The main advantage of bitcoin mining is the potential margin. This index in cryptocurrency is much higher than that of a bank deposit or shares. Besides, no matter what anyone says, mining is “relatively environmentally friendly”.. A wide variety of power sources can be used for mining without losses: from traditional (coal, gas, and so on) to renewable (associated gas, wind, water, solar).
Part of crypto-enthusiasts may ask a logical question: is it worth investing in mining now, because its complexity is constantly growing, as well as the hash rate? Let’s try to answer this question.
When bitcoin mining makes sense
As with any activity, the point of mining is to keep your costs below your income. First you need to find your breakeven point, taking into account how much the specialized equipment (ASICs) will cost, electricity prices, the specific time of mining (the price of BTC is dynamic, at different times the yield is different). In doing so, you can include in your calculations both current bitcoin value (at the time of writing = about $27 200 according to Bitstamp), and the one you expect in the future.
Power Costs
According to Keaton Reckard, an engineer at the Hiveon mining ecosystem, it is only worth mining now if the cost per kilowatt hour (kWh⋅h) for you is 10 cents or less. The geographical factor should be taken into account. Naturally, in countries where there are no problems with energy resources, mining will be cheaper than where electricity has to be exported (for example, a significant part of Central Asia).
Buying some ASIC is not a difficult task in today’s environment. The problem will be efficiency. If you decide to buy the latest new models of equipment, they will not be cheap.
Now if you go to
right now the official website of one of the largest cryptocurrency mining hardware manufacturer Bitmain shows: the model Bitcoin Miner S19 XP Hyd costs $8481, which is equivalent to approximately 685 000 rubles. In addition, you have to spend money on shipping. Therefore, it may be worth turning your eyes to used equipment, which is usually much cheaper. Or at least not the most expensive equipment with exceptional solutions (for example, in the form of the same water cooling at the performance “close to the flagship”).
Market value
Bitcoin’s historical high was shown in November 2021 – $69 000 (according to the same Bitstamp). Obviously, then mining BTC and the subsequent translation into dollars was more profitable than in early June 2023, when the price is just over $27 000. However, not everything is that clear-cut.. Commissions in the Bitcoin network continue to grow, and with it the benefits for miners.
In order to calculate the profitability of mining, you can use online calculators. They differ in complexity of execution and the characteristics taken into account, so the data you get will not always be the same. For example, the Bits.media calculator.
The ideological aspect of mining
Profit is not the only motive that drives individual miners. There are also those enthusiasts who want to support the decentralization and anonymity of the network for which BTC was invented, and mining is an integral part of the realization of the concept.
The process of cryptocurrency mining contributes to the “double spending” problem. In the world of fiat money this dilemma is solved by centralized institutions like the state. Decentralized bitcoin leaves the problem to miners. The idea of not depending on anyone is for many crypto-enthusiasts a rather important addition to the opportunity to get rich.
The impact of halving
Halving is the halving of the blockchain mining reward in bitcoins. Happens once every four years. The last halving was in 2020, and the next one is scheduled for spring 2024. Naturally, it should have an impact on the price of the historically first cryptocurrency;
How? On the one hand, purely statistically, so far after the halving, bitcoin has always risen in price. On the other hand, statistics are no guarantee of recurring events. Since 2020, many investors have refocused their attention on other coins. That is, a big role in how the price of BTC will change after halving, will play the demand for the first cryptocurrency. In general, entering mining before halving was usually profitable for those investors who were focused on a long-term strategy. Don’t forget: during the low rate of BTC equipment for its mining is sold cheaper.
Withdrawal
Mining itself is a complicated process, and making it profitable is even more challenging. To succeed, several factors must be considered: the cost of electricity, the cost of equipment, prices and demand for bitcoin itself, the proximity of halving. Study announcements of new equipment, its technical characteristics, and compare with the current solutions. In that case, if BTC rate trades relatively low and all other parameters are in favor of price growth – probably, the market has formed a successful entry point. Yes, it is not easy to consider all factors in aggregate, and it is worth remembering: the process involves a risk of loss.
This material and the information in it does not constitute personal or other investment advice. The views expressed herein are those of the author and do not necessarily reflect those of research portals and experts.