The amount of computing power of the first cryptocurrency network continues to grow, updating historical records. Three heads of mining companies talked about whether to enter the industry right now.
In mid-January, the amount of computing power of the bitcoin network set a new record – 151 EH / s, having increased by 45% over the past 12 months. This means that more and more miners have turned on devices for mining cryptocurrency.
The rise in the price of bitcoin to a record $ 42 thousand made mining super profitable again, even on aging devices. Three heads of mining companies told what will happen to the industry in the coming year, how the profitability will change and whether it is worth starting to mine bitcoin right now.
“It is getting more and more difficult for individuals to be engaged in mining“
Sergey Arestov, co-founder of BitCluster
The second half of 2020 became golden for all miners. Old devices, such as S9 and L3 +, which cost 3000 rubles in summer. and the former unprofitable even at the electricity tariff of 2.95 rubles. suddenly turned into “typewriters”, and now they bring 4 thousand rubles. per month. Their cost now reaches 15 thousand rubles.
The production of new devices is contracted until the end of 2021. Giants such as the Marathon Patent Group are buying 70,000 Antminer S19s from Bitmain. Only this deal will increase the network hash rate by 7 EH / s, which is almost 5% of the total hash rate.
In addition, we will see an explosive growth in the complexity of the network with the arrival of high water in Sichuan, when internal Chinese migration begins and all equipment of the Middle Kingdom is plugged into the socket.
This will undoubtedly contribute to the fact that it will be almost impossible to mine bitcoin on old devices, unless the rate hits $ 70 thousand. After a 250% growth in December, no one will say that this is impossible.
It is becoming more and more difficult for individuals to engage in production and compete with American giants, but when the market calms down, super profit will go away, the cost of electricity will again become the main criterion, and in Russia it is one of the lowest in the world.
There is already news that Swedish and Norwegian companies are resuming mining, but we remember that during the stagnation, expensive electricity led to a series of bankruptcies.
“The Bitcoin network has passed an important milestone”
Philip Modnov, CEO of LAZM
The basic parameters, on the basis of which the efficiency of mining is calculated, is the revenue per unit of capacity of 1 TX24 servers and the rate of the mined cryptocurrency. This distinguishes the calculation of the profitability of mining from the profitability of investments in cryptocurrencies, where the main parameter is the same – the rate at the time of purchase and sale.
In 2020, the bitcoin network passed an important milestone – the third halving, when the reward to miners for a mined block was halved, from 12.5 BTC to 6.25 BTC.
Let me remind you that miners have two sources of revenue – the reward for the mined block, which is paid by the bitcoin system itself, and the commission for the completed transaction, which is paid by the sender. Due to the reduction in mining rewards, miners’ revenue is decreasing, and mining enterprises are looking for ways to compensate for the lost profit – they are switching to more energy efficient and powerful equipment, they do not sell the mined bitcoins right away, but wait for the rate to rise, and so on. Therefore, the strengthening of bitcoin after the third halving was quite expected.
A large amount of obsolete 16nm equipment was withdrawn from the market in the fall of 2020, especially in China after the end of a period of low electricity prices, traditionally caused by the rainy season and cheap electricity from hydropower plants.
But little new equipment was installed in the fall, so the growth rate of network complexity slowed down compared to last year. Instead of multiple growth – only + 35%.
As a result of halving, changes in network complexity and currency fluctuations, mining revenue fell from $ 0.17 to $ 0.07, then soared again to $ 0.21.
For Russian miners, the drop in revenues was slightly offset by the growth of the dollar against the ruble, since part of the operating expenses, including electricity bills, is denominated in rubles.
Effective resource management of data centers allows miners to work efficiently under any fluctuations. It is a key skill to be able to make the most of the equipment for a long time.
In this case, the massive market drop does not affect the miner so much, and you may not be disconnected when everyone has already failed because of the prices for service and electricity.
Computing centers with a large number of machines and favorable accommodation conditions did not have any disaster from halving or exchange rate fluctuations.
It is more difficult for private miners to work in such conditions, so they should cooperate with proven cloud mining services that can be counted on the market.
It is also necessary to take into account changes in Russian legislation regarding digital assets, which entered into force in January 2021.
In 2021, the process of updating computing equipment in mining centers will continue. The best in efficiency machines will be massively installed in data centers without regard to the price of electricity, and obsolete models will be transferred to cheaper locations.
The active growth in network complexity, which never happened in 2020, will begin in the spring of 2021. This will lead to a correction in revenue.
“It’s never too late to start mining cryptocurrency”
Jahon Khabilov, CEO of Sigmapool
It’s never too late to start mining cryptocurrency. The question is in terms of equipment maintenance and electricity costs – these are the two main cost items.
You do not need to agree to any conditions, you need to look for the best options that were before the price rally. Now it is worth starting to mine cryptocurrency, and for sure it will also be profitable tomorrow.
Will Bitcoin become a currency that is more efficient for companies to mine than for private individuals in 2021? I would rather disagree with this, because in the entire previous history of this cryptocurrency there was no such period when its mining was unprofitable even for single players.
2021 has every chance of being the last year when older generation equipment with chips over 10nm becomes completely ineffective. In all likelihood, the current Bitcoin price rally will be the last breath of the Antminer S9 class equipment.
After the market is saturated with new generation equipment, by the middle of the year, old class devices will become ineffective. Novice miners need to keep this in mind, because 2021 will be marked by a complete transition of the entire world hash rate to equipment of a new technological level.