With recent changes in cryptocurrency prices and looking at how the market is shaping, the question that many people are asking themselves is: is cryptocurrency mining still profitable in 2018?
And like with most questions the answer is: it kind of depends…
But let’s go step by step. In order to determine the potential ROI (returns on investment) of crypto mining, we should first establish what goes into the cost of this process.
Hash rate is a measure of ASIC’s computational power, or if we were to put it in simpler terms, the hash is the equation that needs to be solved in order to mine a unit of cryptocurrency. And the rate determines how quickly your machine solves it.
Higher the rate – more crypto you can gain in a timeframe.
The blockchain & Block reward
The block is a list of all cryptocurrency transactions that is being recorded by mining equipment. BTC, for example, have a block time period of approx. 10 minutes. The growing record of all such transactions is referred to as Blockchain.
Each time you solve a block, a set number of cryptocurrency is created and it’s awarded to the miners. The initial number of BTC created after solving a block was 50. But as Bitcoin gained in popularity and more people were involved in mining activities, this amount was halved in 2012 and halved again in 2016.
This process will continue until the BTC reaches its limit, which is set to be 21 million.
After gaining a lot of popularity, the difficulty of mining cryptocurrency increases. This is caused by increasing of mining machine’s Hash Rate. With more people competing for cryptocurrency the balance of demand and supply needs to be maintained, which results in block time reduction.
The difficulty is not a constant value; it tends to fluctuate, and causing changes in price.
Electricity cost & power consumption
For you to run mining equipment, just like with any other equipment, you require electricity. The cost of electricity is one of the largest factors of profitability. That’s why China dominates the BTC mining market, the cost of electricity there is significantly lower when compared to countries like the USA.
Mining pools are groups of miners that through combined computational power can mine cryptocurrency at a faster rate and with greater efficiency. Setting up your own little “farm” is not as profitable as joining the pool.
When joining the mining pool, you contribute to it with your computational power, and you receive crypto per share. But these pools have fees associated with them. For mining BTC it’s usually around 1.5%, but the amount will vary from one pool to another.
General State of Cryptocurrency
So there are quite a few factors that play into the profitability of mining any cryptocurrency. How good of an idea it is to mine a particular coin would largely depend on its popularity at the moment (which determines the difficulty), the pool you are going to choose, and where you are situated, as your electricity fee might be not as good as Chinese.
We’ll discuss two, probably most popular cryptocurrencies in the world right now: the father of all coins – Bitcoin, and its closest competitor – Etherium.
Is Ethereum Mining Profitable in 2018?
The biggest news for the Etherium was the announcement by Vitalik Buterin, the creator of the Altcoin. He said that ETH would move from a proof-of-work to a proof-of-stake framework. What does it mean?
Right now ETH network uses miners to confirm network transactions. The proof-of-work model means that as the currency matures and the demand increases, the difficulty of mining will increase significantly.
Switching to the proof-of-stake concept will mean that the energy cost will be minimized, making it easier to mine ETH. But it also says that the market will no longer require users with computational power. Which makes it a double-edged sword in the long run. You still can get a developing cryptocurrency on your wallet for now. However, it’s hard to predict how the change of algorithm will affect the ETH market.
So while it’s still one of the most valuable currencies to mine, Etherium will change, to not meet the fate of Bitcoin with its currently ridiculous difficulty. But it also means that you are taking a gamble, believing that a new algorithm will not push miners out of the market.
How Profitable is Bitcoin Mining?
The “how much can I make mining Bitcoin?” question is very popular right now, so let’s consider that you have a way to reduce your electricity fees to the competitive level.
At the moment the Bitcoin mining profitability depends on to many factors, namely how much money you are willing to invest in it. Right now, there are only a few ASICs on the market that make BTC mining profitable, and the one that will stick for a while is Antminer S9. There are still some miners being utilized for that matter, but they’ll soon be outdated and completely inefficient.
So, if you have a capital to get S9s and set them up with low electricity fees with good enough mining pool, then yes. Mining BTC is still profitable. You can get substantial profit after 6-12 months, which is very good in the realm of Bitcoin.
But also, you have to consider investing in security, since setting up a massive BTC mining operation can cause power outages, network disconnections and there are always possibilities of hardware failures. Having a well-engineered farm is no easy task, but otherwise, you risk damaging your expensive ASICs and loose in the long run.
So to conclude, mining can still be profitable, but just like before there are risks associated with it. Depending on the cryptocurrency of your choice, you will run into different roadblocks and uncertainties. If you are determined to get into mining, then you can shop for ASICs and other equipment at Bitmainmasters. We offer competitive prices, 90 days warranty and worldwide shipping for our every product.