Bitcoin mining is a legit job, but initial investments and cost of mining are very big.
Is Bitcoin mining profitable these days? When the price of gold drops, miners are losing. It is the same story in the world of cryptocurrencies.
According to CoinMarketCap data, the prices of Bitcoin have tumbled nearly 30% in the past week and hit a 14-month low of about $3,800. The total market value of cryptocurrencies has slumped to $148bil, which is less than one-fifth of its worth during the market’s peak in January. Hong Kong-based cryptocurrency exchange OKEx forced an early settlement of Bitcoin cash futures contracts on its platform the day before. Widely thought is that it has triggered the sell-off.
The price drop has left miners in a weak position. They claim it has become unprofitable for them to run at least four models of bitcoin mining machines. According to the latest estimates of Beijing-based F2Pool, if they spend power at a rate of $0,06 per kWh it is clear that mining becomes unprofitable. F2Pool is one of the world’s biggest bitcoin mining pools.
Cryptocurrency mining has developed from a bedroom activity to mass-scale production. Later, it was undertaken by enterprises that use specialized equipment with application-specific integrated laps. The crypto miners combine their computing power in mining pools to increase their odds of winning new digital currency. They are counting various factors, the total amount of computing power in the network, and costs. Coasts are electricity and rental fees. That determines which coins to mine and where to house their devices. The cryptocurrency dropdowns have forced miners to remove at least four models of bitcoin mining machines. Some of them have become too expensive to operate under present market conditions, estimates F2Pool. These models are Antminer S7 and Antminer S9 from Bitmain Technologies as well as Canaan Creative’s AvalonMiner 741.
Is Bitcoin mining profitable now?
A group of Chinese cryptocurrency miners said they have already shut down 20,000 rigs, or about 10% of the total number of machines they operate. They declined to be named for fear of government reprisal.
But their struggles are an opportunity for others.
One miner bought about 50,000 used mining rigs that were put up for sale in the market over the past few days. He intends to send these used rigs to countries with lower electricity prices. He is thinking about Russia and Venezuela. In this way, he can turn a profit selling them there.
Correlation between mining and Bitcoin price
Mining Bitcoins takes time and resources. Let’s say, it’s not an easy thing to do in the first place. It requires high-powered machinery to make Bitcoin mining profitable. If you lack the resources, you will lose the potential earning and have to pay a huge sum of money for your electric bills.
According to CNBC, in March, the miner’s profits have roughly halved compared to their earnings in December due to the surge of interest. So, we can say Bitcoin mining is no longer profitable today. Over the past days, Bitcoin’s range had tightened up and seemed like another wild move will take place. We are not quite sure in which direction. From one side, the market is eager and deserves a correction back to the $5K+ area. But on the other hand, there is still a lot of panic selling, and Bitcoin looks like has to go lower.
There are several profitability calculators that miners can use to analyze the cost/profit equation of Bitcoin mining. Calculators vary as they have different levels of complexity and variables that can be inputted.
Bitcoin currently trades essentially at the break-even cost of mining it.
To answer if Bitcoin mining is still profitable you have to figure out if you are willing to invest the necessary initial capital for the hardware. And you have to predict Bitcoin’s value in the future as well as its mining difficulties. When both prices and mining difficulties fall, it usually means less miners, but more Bitcoin to mine. When the opposite happens, more miners are competing for fewer Bitcoins. Bitcoin is a real business, so you may accept mining bitcoin as a legit business. There are people working in this business, also have revenues, profits, earnings, plant, and equipment. It’s almost the same, there is no difference between mining bitcoin or coal. Except, mining bitcoin is all math. And there’s no scam.