Will Crypto Mining Ever be Profitable Again?

Best Profitable Crypto Mining Ever

When first entering the world of cryptocurrencies, one inevitably asks themselves the question: “is crypto mining profitable?” While mining crypto as an individual used to be a profitable endeavor in the early days, it’s a little late in the game now. This isn’t to say that at some point in the future it will become profitable again, but at the moment, the answer is a bit murky.

The short answer is that crypto mining can be profitable, but it requires a lot of research, planning, investment, and risk. If you are not willing to put in the work, the best advice is to instead invest in crypto by buying it on an exchange.

To figure out if mining is a worthwhile investment, one has to calculate electricity fees, the cost and accessibility of mining hardware, and the mining difficulty or “hashrate” of the blockchain network one is mining.

For this article, we are going to focus on traditional proof-of-work (PoW) mining and its profitability.

A Deeper Dive into Mining Profits

If done right (and this is key), crypto mining can be more profitable than simply buying coins on an exchange due to margin costs. With Bitcoin for example, Miner Daily calculated that the lifetime cost to mine one BTC with a 100T Antminer S19j Pro (factoring in the price of the hardware and electricity costs) is about $17,796. Depending on your mining rig, Miner Daily estimated that the average lifetime cost to mine one BTC is between $15-19,000. Given that the price of one BTC is currently around $51,000 at the time of writing, there is obvious profit potential there. The real question is, are you willing to put down that much cash if you are not sure how to operate and maintain the technology? There is obviously a lot of risk here, and a significant barrier to entry due to the high mining rig prices.

If accessibility to mining hardware wasn’t already difficult, the current supply chain disruption in the semiconductor industry caused by the COVID-19 pandemic has made things worse. The bottleneck has caused a significant shortage in ASIC chips, which has driven their prices up even higher.

ASIC manufacturers and mining companies that have already developed mining fleets are going to make huge profits. New miners, not so much.

But it wasn’t always this way.

Bitcoin Mining: Then VS Now

Back in 2009, mining Bitcoin was incredibly easy compared to today’s standards. All you needed to do was connect your personal computer to the network. Because everyone was mining on home computer systems, the competition was fairly equal. Miners didn’t need to invest in costly hardware.

Around 2013, specific Bitcoin mining rigs were created to ramp up the efficiency of the system. Application-specific integrated circuits (ASIC) chips outperform regular CPUs by an order of billions of hashes per second, effectively eliminating hobbyist CPU miners from the industry.

Proof-of-work blockchains also adjust the mining difficulty periodically based on the total amount of computing power (or hashrate) present on the network. This keeps block times and rewards stable, and secures the system to prevent double-spending attacks.

At present, the Bitcoin network difficulty level is extremely high, which makes competing with large mining companies to earn block rewards near impossible for solo miners.

The Necessary Steps for Crypto Mining

With this background information out of the way, it should be obvious that crypto mining is not for the faint of heart. If you still want to try it out, there are a few necessary steps to take to be successful: First, prospective miners should perform a cost-benefit analysis to calculate their break-even price before purchasing equipment.

In order to calculate this, you need to jot down certain variables including your electricity rate, the efficiency of your mining rig, the time that you will spend mining, and the current market value of the coin you are mining (so that you know the amount you are selling for when you take profits). A great tool to help you calculate mining profitability is through the website NiceHash.

Depending on the crypto you choose to mine, it is generally recommended that you purchase either a GPU like a Nvidia GeForce RTX 3090 (for Ethereum) or an ASIC machine like a Bitmain Antminer for mining Bitcoin. An RTX 3090 can generate an estimated $8 dollars a day in ETH, while an Antminer S19 Pro can net you around $30 per day in BTC.

Whether mining will be profitable really depends on your hardware. For example, an Antminer S9’s daily profit is only $0.62. With a monthly income of around $19 dollars, that would take you years just to break even. This is why more expensive hardware is usually needed – and a lot of it.

Solo Mining vs Pool Mining

Before you mine, you should also be aware of the distinction between solo mining and mining in a pool. Mining pools are a collective group of miners who pool their computational resources on a single node to increase their chance of winning a block reward.

This strategy is much more economical than solo mining as it guarantees consistent income. Payouts are calculated based on the amount of computational power you contribute to the pool.

When solo mining, you will be at a huge disadvantage statistically speaking.

Final Thoughts

In short, crypto mining has high cost and technical knowledge barriers to entry. It is a highly competitive and risky environment, and is not recommended for the average person.

Indeed, while some have found that Ethereum has a lower barrier to entry than Bitcoin, the network is transitioning from PoW to PoS (proof-of-stake) soon, so it’s not worth purchasing a GPU with the intent to mine ETH at the moment.

There are other ways to make passive income with crypto, such as staking or providing liquidity to a DeFi pool. Simply investing in cryptocurrency also offers a way to make gains on crypto without mining. As an alternative to mining, one could instead decide to invest in mining company stocks such as Riot Blockchain or Marathon Digital Holdings to add crypto mining exposure to your portfolio.

Mining Facilitators

Partnering with a mining facilitator can offset some of the risk if you do decide to pursue mining. A mining facilitator is a company that will install and operate your mining machine for you, and is experienced in generating returns on mining.

At Cloud Rush USA, we help investors mine Filecoin by offering cutting-edge data storage hardware and installing this hardware in efficient and secure data centers. We take care of everything from machine purchasing, maintenance, installation, and network/pool connectivity at a low cost, to make the mining process quick and effortless for our clients.

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Cloud Rush USA is a Southern California based cryptocurrency mining facilitator specializing in Filecoin mining plans. The views and opinions expressed on this Site are solely those of the author(s) and do not necessarily reflect the views of Cloud Rush USA or its employees. The content provided on this Site is for informational purposes only and should not be construed as investment, financial, or other advice.

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