Cryptocurrency mining: is mining still profitable?
Due to the fall in the value of cryptocurrencies, mining is becoming less profitable, and in some cases it is already becoming unprofitable. This will lead to the withdrawal of some players from the market.
Experts do not agree on whether cryptocurrency mining continues to be a profitable business. One of the main indicators here is not only the cost of cryptocurrency, but also the cost of electricity. mining "tends to zero" (that is, at least pay off), if bitcoin costs 3.7 thousand dollars, and the cost of KWh is 4 rubles. At a cost of 3.5 thousand production becomes unprofitable. It should be noted that in many regions of Russia the cost of electricity can be twice cheaper. in the case of electricity costs of 2.5-3.5 rubles, "mining will remain profitable at the current rate for a long time."most of the cryptocurrency it is vital to exceed the cost Minina.
"Russian and Chinese miners are likely very close to the point at which mining becomes unprofitable. If we take into account the cost of equipment, the payback of ASIC-miners can be more than 5 years. Times when such costs "fought" for 1-2 months, far behind, " - said the expert.
However, this is not a reason to worry users of crypto-currencies. He notes that the decrease in the number of miners due to the exchange rate will not affect the value of coins in the long term.
If the mining of some cryptocurrency is not yet unprofitable, it is rather an exception than the rule. Georgy Kerimov, the head of blockchain technologies at the FORCE Training center, thinks so. In his opinion, bitcoin mining is now unprofitable in many countries, but much depends on the equipment that produces coins.
«But this is by no means sad news. On the contrary, we have been waiting for this for almost a year. Around the world, equipment owners are shutting down their miners. There is an outflow of huge computing power, and the total network hashrate falls. Offer begins to decline, the price of the inflated turns into a very attractive»
Dynamics of prices of the cryptocurrency
The volume of transactions to be processed
The question of whether encryption algorithms have a strong impact on the prospects of mining is answered negatively. But there is uncertainty in this direction. The list of popular cryptocurrencies often changes and it happens that it is impossible to reconfigure the equipment for them. the algorithms only affect how the device receives mine. However,"by and large, do not affect the cost of mining." It is already affected by the performance of the equipment used.
"The fact is that each cryptocurrency has different methods of proof of production, as well as different goals. One crypto currency is created to be resistant to ASIC miners, the other - to attack at the level of 51%," the expert explains.
Now we are talking about the fact that much can change due to the introduction of algorithms that do not require powerful devices to confirm transactions and support the network. In this regard, the question arises about the prospects of ASIC-miners.. Otherwise, there is a fork.
"If you look at the history, we can find an interesting case related to the coin Siacoin. They changed their Proof-of-Work algorithm, which worked on the Blake2b encryption algorithm. And the main change was that they banned the use of devices from Bitmain and Innosilicon for mining their currency and allowed the use of equipment of their own production of Obelisk in their network. For example, the device from Bitmain Antminer A3 their owners no longer profitable, as it has no ability to mine this coin," says development Director BitCluster.
The trend for the transition from POW to POS mining is recognized by Georgy Kerimov, head of blockchain technologies at the FORS Training center. But the transition process is not instantaneous. The expert believes that at least five years ASIC-miners "will diligently "bite into the walls of" cryptographic algorithms".
If the trend will be implemented in the future, all proof-of-work miners will have to stop operations and sell equipment “for spare parts” or if possible to move to the mining of other currencies, . But there are advantages.
"This is quite a normal story, because cryptocurrency developers should first of all think about the interests of users, not those who support the work of the network. The second outcome is an update to the encryption algorithm to protect against ASIC miners (as Monero did in April 2018). In this case, the profitability of ASICS and less productive chips (e.g. FPGA) will be at the same level," explains the expert.
Of course, for some it will be a negative factor and they will leave the market. The expert advises to study the project roadmaps in advance to understand how this or that structure is configured in relation to ASIC-miners.