How profitable is Bitcoin mining in the current conditions: realities and prospects

At the moment, the cost of the first cryptocurrency is 50% lower than the historical maximum, and the network complexity has increased many times since December 2017. Let’s figure out whether digital money mining remains a profitable activity in the current conditions.

Now the difficulty of mining Bitcoin is at a record high of 11.8 T. Since December last year, this figure has increased by 115%, and since the end of 2017, when the first cryptocurrency set a historical maximum value of $ 20,000, by 556%.

Since then, the cost of the main digital coin has decreased almost twice, but mining companies continue to produce more and more efficient equipment. This allows cryptocurrency mining to remain profitable even on less top-end devices. At least that's what Fundstrat co-founder Tom Lee thinks. According to him, the cost of getting one Bitcoin coin using Antminer S9 from Bitmain and electricity at 3.72 rubles per kWh is now $ 7.3 thousand.

However, in addition to the cost of equipment, the price of Bitcoin mining also includes the rental of space and the maintenance of Asiks, so in reality, one Bitcoin can cost more than seven thousand dollars. Taking into account all the costs, the market situation remains favorable for the purchase of equipment, says Alexey Krasnoglazov, Director of Sales at Bitcluster. According to him, the payback period for new devices will be about 10 months.

“Now three major mining equipment manufacturers are represented on the Russian market: Bitmain, Innosilicon and Whatsminer. The top line of equipment now is Antminer T17 from Bitmain, Innosilicon t3-50t, Whatsminer m21s. These devices give out 50Th / s, which is quite a lot. Innosilicon t3-57t models with a capacity of 57Th / s are expected to arrive in October, and Whatsminer will ship m20s 67 Th / s devices in November. This is all with the same electricity consumption of 2.6-3 kW / h , ”the expert explained.

The official cost of the equipment is about $ 3000. At the same time, due to the quick payback, mining can be called more than a highly profitable investment, the expert believes.

The thesis that mining remains a profitable business is confirmed by the fact that over the past three months, 600 thousand new miners have been connected to the network of the first cryptocurrency. Since the beginning of summer, several new ASICs have appeared on the market with an average power of 55TH / s, and the hash rate has increased by 60%. Therefore, now a small deficit of new equipment has reappeared, delivery may be delayed for several months.

“Mining is a less risky investment than direct investments in cryptocurrencies due to hedging volatility. The point was to buy equipment yesterday, but it will be tomorrow. After a halving, the income of the currently relevant equipment will fall by half, so you need to make your own calculations and decide whether to start now or wait for a new generation of mining equipment. Investors support the interest in Bitcoin and more and more people believe in its growth, so mining is relevant now and will be of interest after halving, ”says Georgy Zabadayev, Head of Sales for Eastern Europe and Central Asia, Hardware Department of Bitfury's Hardware Department.

He added that at the moment, in addition to buying equipment or cloud mining , other opportunities for earning money from the extraction of digital money have appeared. For example, there are mining funds that invest in digital mining sites with the lowest energy and operating costs. Such companies are aimed at institutional and professional investors, but their success is currently difficult to judge, since there is no necessary information and research for this.

You can also purchase shares of publicly placed mining companies. Zabadayev suggested paying attention to Hut8 securities, which are traded on the Canadian stock exchange in Toronto.

RACIB Vice President Valery Petrov also considers mining a profitable business, at least in the horizon of two years. According to the expert, the main risks are the digital currency depreciation amid unresolved regulatory issues, the prospect of launching national cryptocurrencies (especially Chinese) and the Bitcoin halving to be held in 2020.

“The demand for mining equipment is likely to fall, and with it, prices. This creates good conditions for buying up used equipment, or getting big discounts from manufacturers (for those who have access to cheap electricity). Therefore, strangely enough, the profitability of this category of investors in mining can even grow, ” Petrov believes.

At current Bitcoin prices, mining remains a profitable business, experts are sure. Moreover, it is even less risky than direct investment in digital money. However, cryptocurrency halving, as a result of which the reward for the mined block is halved, can seriously change the situation. Therefore, it is necessary to evaluate all the risks associated with this before purchasing equipment, because in May 2020 it may turn out to be irrelevant and will not have time to pay off.

Publication date 09/19/2019
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