Oct 13, 2018 at 09:32
Oct 13, 2018 at 09:32 UTC
Cryptocurrency Mining? Still Profitable in 2018
Ethereum has been witnessing a decline in the past few months, while on the other hand its hash rate is increasing. In fact, in the past eight months or so, Ethereum’s hashrate has almost tripled to 300 trillion per second. Essentially it means that if your mining gear could earn USD 100 in December 2017, then currently it can only make around USD 2.5. This goes on to show the changing fate of mining business.
Experts are of the view that the rise in hashrate was more due to asics. For example, Ethereum asics are only a little more efficient than GPUs. Hence, new hardware might keep up, but at a price of USD 300 for 1 ETH, we can safely say that some of them might be going under soon.
As per a March 2018 report on ETH mining, a mining rig of 93 MH/s was able to earn somewhere around USD 24 per week at the the price of Ethereum at USD 600. If we compare this to say August prices, then the earning of a miner would be just about USD 12. If we add the electricity costs then it was just USD 10, which leaves a profit of only USD 2! However, if we also account for the hardware costs, then a loss is probably incurred.
As per a study conducted by American investment bank Morgan Stanley, it was estimated that under the price of USD 8,600 per Bitcoin, mining farms will not be able to break even in two years time. This estimation is based on electricity costs. According to Electricity Local, an electricity statistics website, the costs of industrial electricity in China was 4.8 cent. The estimation has been arrived at based on a worse case scenario, where hardware costs have also been accounted. Hardware costs can counter the upswing in hashrate for Bitcoin, which was at 52 quintillion. Miners can easily replace gear since new asics cost somewhere around USD 1,000. The previously mentioned asics cost is more a retail cost, however minings farms are more likely to buy the gear in bulk, hence a better estimate can be arrived at with 10% leeway either way.
Hence, we can come to the conclusion that even Bitcoin miners are at the risk of making a loss. An electricity company revealed in April that to mine one Bitcoin in China, the cost would be about USD 3,000. However, this may just be the cost of electricity. If we account for additional costs incurred by hardware and everything else, then the cost of mining a Bitcoin would be better placed at USD 5,000.
Therefore, we can arrive at the conclusion that according to the above mentioned numbers, miners may still be in profit, but they are definitely at the risk of going under soon. For example, according to leading Blockchain technology company, Bitfury, it was accounted for 10% or more of the hashrate of Bitcoin. Today, it stand at about 1.7%.
With new asics, Bitmain’s gear is also getting outdated, and this would mean new investments. Hence, miners are likely to start feeling the crunch.