Why mining will remain profitable even if the bitcoin rate falls to $ 5 thousand, which devices are better to buy and what rules must be followed in order to trade cryptocurrency as efficiently as possible
Bitcoin hashrate continues to recover from the crash last summer. Since the beginning of July, the indicator has increased by 66%, to the current values of about 139 EH / s (exahashes). At the same time, as a result of the last recalculation, the complexity of mining the first cryptocurrency reached 19 trillion hashes (T), and since July it has grown by 31%.
Experts told topplabs.org what is the minimum threshold for entering the mining industry, how quickly the investment will pay off and at what price of bitcoin its mining will remain profitable.
How much start-up capital is needed?
The minimum entry into the bitcoin mining market that makes sense is about $ 8-11 thousand, says Michael Jerlis, CEO and founder of EMCD. For this money, you can get an up-to-date energy efficient device with a payback period of 11-13 months. Accommodation and maintenance can be taken over by mining hotels or special companies, and this will be the easiest way to enter the market, says Jerlis.
If you start with ASIC miners, it can be 1 Antminer S19 with a capacity of 95 TH / s or S19Pro 100 TH / S, with an average cost of $ 10 thousand and $ 11 thousand dollars, respectively, or several less powerful devices with a large total hash rate, such like Whatsminer M21S 54 or 56 TH / s, with an average cost of about $ 4 thousand, the specialist advised.
These devices are ready to mine right after purchase – they need to be put in a mining hotel or a separate room, connected to an outlet, the Internet, and set up a connection to the pool.
In the case of video cards for mining altcoins, on average, this is one farm assembled of 8 video cards. Assembled means in a case suitable for installation in a mining hotel on a shelf, with a motherboard, processor and all the rest of the stuffing necessary for mining. Such a farm can cost from $ 7.5 thousand to $ 12.5 thousand, depending on the video cards that will be in it. If you do not take into account the most expensive RTX 3090 – a farm with such video cards will cost much more than $ 13.5 thousand.
According to the specialist, the advantage of video cards over ASIC miners is that they can be installed at home, since they are less noisy. You can also save on assembly, abandon the case, buy inexpensive components, the expert advised.
“There is room for optimization – for example, you can buy used devices. It is cheaper and can reduce the payback period by 1.5-2 times, but carries the risk that the device will break down or immediately be in a semi-working state. Unfortunately, only a professional can immediately determine that the device is defective, ”explained Jerlis.
There is no upper limit and level of immersion for this business, the expert explained. According to him, it is possible to bring trucks of devices by buying out the workshop of the plant, or you can gradually buy additional devices up to the required capacity or volume of mined cryptocurrency.
What is the break-even point of Bitcoin mining?
The break-even point depends primarily on 2 factors: the efficiency of the equipment and the price of electricity or hosting. That is, each player has his own break-even point. Nevertheless, some estimates can still be made, said Bitfury Group CEO Vadim Krutov:
- The average efficiency of the equipment is about 40-45 J / TH, the average price of electricity is about 4 US cents per kWh, explained Krutov. For such an average player, the production cost will now be about $ 7 thousand for 1 bitcoin;
- For the strongest players with equipment of 30J / TH and an electricity price of about 2.5 US cents per kWh – about $ 3 thousand for 1 bitcoin;
- For players with equipment of about 60 J / TH and an electricity price of about 6 cents per 1 kW * h – about $ 13 thousand for 1 bitcoin;
- The weakest players who have now switched on the equipment of the 2016-2017 generation have an even higher production cost – up to $ 25 thousand for 1 bitcoin.
“Based on these estimates, mining will remain operationally profitable up to about $ 25,000 per bitcoin, below this price the least efficient players will start to suffer losses and drop out. Most of the players will have to leave the market at a price of about $ 4-5 thousand, the turn will not reach the strongest players under any reasonable scenarios of market development, ”the specialist says.
Perspective
There are noticeably more institutional investors on the market, who carefully assess all the risks, buy the most efficient equipment, even if it has to wait for almost a year, and place it on sites with low electricity prices, Krutov said. He called this strategy the most reliable protection against negative market development scenarios.
“Retail investors, on the other hand, make mistakes when buying any equipment, placing it on expensive sites, focusing primarily on delivery and placement times, and not on a long-term game,” the expert emphasized.
Correction of the crypto market for those who are seriously involved in the mining business is an opportunity to increase capacity, Jerlis added. According to him, the price of mining equipment correlates with the rate of the first cryptocurrency. At such moments, those who prepared and accumulated a liquidity reserve win in order to grow on the fall of the entire market, including by buying out cheaper equipment.