2017 became the year of mining. Is it profitable to do this in 2018, is it worth mining?

2017 was, without exaggeration, the year of cryptocurrency mining. In the wake of the explosive growth of major currencies such as Bitcoin and Ethereum, other coins mined by mining also jumped in price. Growing profitability has forced more and more people and companies to do this, and sales of equipment for mining “cryptocurrency” have increased several times. But what will happen next, is it profitable to mine in 2022 and is it worth investing in mining?

At the end of 2022 - beginning of 2022, after the growth of cryptocurrencies, a correction phase began, which is still ongoing. The profitability of mining has decreased, but interest in this activity remains, although debates about whether mining is worth doing in 2022 continue on the forums.

What is mining

First, let’s remember once again what mining is. This term, derived from the English verb to mine in the meaning of “mine,” denotes the process of calculations made by a computing device according to a certain algorithm, for which the owner of the device receives a certain reward, provided for by the protocol of a particular cryptocurrency.

Mining is not relevant for all cryptocurrencies: the evolution of the blockchain entails changes in technology. Some, instead of the classic algorithm]Proof of Work[/anchor], use alternative consensuses - Proof of Stake (proof of ownership) and modifications thereof (for example, LPoS in Waves).

As already mentioned, the growing profitability of mining has attracted many people to this activity: both individuals and various organizations. You can mine cryptocurrency:

• on video cards;
• on special miner devices;
• by purchasing a mining contract from a cloud mining service.

The first two methods require significant investments in equipment, associated costs for electricity, cooling, depreciation, etc. In addition, mining on a single video card or hardware miner (they will be discussed later) is simply not very commercially profitable due to the high complexity production Therefore, for effective operation, a cluster of devices is required - a “farm” with several video cards or special miners. On average, mining begins to pay off when using a farm of 4-5 powerful video cards and more than two or three “boxes” with high-performance chips.

As cryptocurrency grew, prices for hardware also increased, which is why cloud contracts gained popularity in 2017. By paying a certain amount to the service, you can make a profit (minus commission) without spending money on purchasing, setting up and hosting hardware.

Interesting: as mining becomes more difficult and expensive, projects are being developed with a lower “entry threshold” for the end user - for example, blockchain projects for renting disk space, which require a large amount of storage on HDD.

This is, for example, the Siacoin, or Filecoin project. The cost of a 6-10 TB hard drive (about 25 thousand rubles) is noticeably lower than a top-end “minable” video card with 6 GB of memory on board (from 50 thousand for a GTX 1080) or a competitive ASIC miner, and to assemble a “farm” for 30- 40 TB will be significantly cheaper.

True, mining on hard drives also has its disadvantages, for example, the HDD can fail faster during active use.

Solo mining

This is the name of the process when the owner of the equipment works for himself and receives all the profit for the open block. But given the high complexity of mining, this method requires significant computing power, which not everyone can afford. Therefore, many resort to another method - mining in a pool.

Loot in the pool

A pool is a node that coordinates the work of users connected to it and combines their computing power to open new blocks of the selected cryptocurrency. Profit is distributed among the pool participants depending on the latter’s settings: usually more coins are received by those who, according to pool statistics, “gave” more power to it.

Important: the pool also takes some commission for its work, and some enthusiasts of the cryptocurrency world make money by creating and advertising their pools. The more users work in a given pool, the higher the profit of its owner.

Ensure energy consumption

Mining requires electricity—lots of electricity. If you're building a home farm, you'll need an ATX power supply, so invest in the most efficient power supply you can afford.

For example, consider two cases: A power supply that is guaranteed to provide 860 W and is 93% efficient will actually require 925 W (860 W/0.93). In contrast, a 750W power supply that is only 80% efficient will actually require 937.5W (750/0.8) - so it uses more power and delivers less.

When creating a mining rig, you will need to consider the power requirements of all the components you use, especially any graphics cards. In addition, it would be nice to provide a small reserve in case of unforeseen events and for overclocking the system.

On the other hand, due to their narrow specialization, ASICs can perform much more calculations with less energy consumption. They come complete with the appropriate power adapter, so you don't have to figure out which adapter you'll need. The mining efficiency of different systems can be compared by dividing the number of hashes that the system performs per second by the power consumed:

Hash rate / power consumption = mining efficiency

Mining in Russia and the world

Mining is carried out in many countries around the world. The key parameter is the cost of a kilowatt of electricity: the lower it is, the higher the profitability of production, because electricity costs are reduced. Russia boasts relatively low energy costs compared to, for example, the US or Australia. But the second parameter, Internet connection speed, which is also critical for mining, is still not up to par in the Russian Federation - broadband is not available in all populated areas, so large mining farms are concentrated in areas with good Internet connections.

Table 1. Country summary data.

The Bloomberg agency has compiled a map that visually reflects the degree of convenience of cryptocurrency mining by country:

Figure 1. Infographic from Bloomberg.

China

As you can see, China is in the “green zone”, and this is not without reason: electricity is quite cheap there, which makes mining justified. In addition, cryptocurrencies are supported by Chinese businesses. In particular, there are rumors that energy companies are using excess generated energy to power mining farms.

Statistics say that Chinese farms and pools provide a total hashrate (computing power) of up to 60% of everything the Bitcoin network has. That is, up to 60% or more of new BTC coins are mined in China (the Antpool pool hashrate, for example, reaches 3 PH/s (petahashes per second). And new capacities are constantly being introduced in the country.

In the spring of 2022, some details emerged about a Chinese cryptocurrency mining megafarm located in Sichuan province; a photographer managed to get there. Judging by the available data, this is a huge complex with mining equipment.

Figure 2. Farm in China.

According to inaccurate data, there are at least 500 AntMiner rigs there, producing at least 2 BTC per day. New farms with hundreds and thousands of rigs are also being built in Guizhou province and other regions of China.

This country also mass-produces mining equipment: both for domestic needs and for export. However, at the end of 2022 - beginning of 2022, the Chinese government announced a fight against mining due to risks to the economy and excess energy consumption.

Iceland

One of the most famous owners of mining capacity is the Genesis Mining cloud service, whose data centers are located in Iceland. Today, this company is a world leader in providing cloud services in the field of cryptocurrency mining.

Figure 3. Genesis Mining data center.

The Enigma data center contains several tens of thousands of pieces of constantly updated equipment, the power of which is calculated in petahashes.

Georgia

The data centers of the BitFury company are located in this country, confidently moving towards leadership positions in mining. At the end of 2017, Bitfury accounted for up to 10% of the capacity in the Bitcoin network.

Interesting: BitFury uses its own equipment for mining. Bitfury B8 produces up to 47 terahashes per second with a peak power consumption of up to 6.4 kW.

Russia

In the Russian Federation, thanks to relatively cheap electricity, mining continues to be a profitable activity - but only for those who are willing to spend a fairly large sum on equipment.

The location of the largest mining farm in Russia remains unknown; the owner does not disclose this data for reasonable security reasons. But some of its data are known:

• area 1.5 sq. km;
• energy consumption – more than 4 MW/h;
• electricity costs per month – about 6.5 million;
• quantity of equipment – ​​3000 (possibly more) AntMiner S9 ASIC miners;
• productivity – about 38 petahash;
• profitability – up to 10 BTC per day.

At the beginning of 2017, before the increase in complexity and the jump in exchange rate, the farm could bring its owners up to 600 BTC.

Figure 4. Farm on ASIC miners.

Related news

The topic “Mining 2018” will not be fully covered if we do not talk about important news in the cryptocurrency sphere, which cannot but affect its development next year:

1. Will there be a breakthrough? There are such prerequisites. In any case, there is already active talk about launching mass production of new models of 7nm chips (the size currently used is 14-16nm). Intel, Samsung and a number of others are working on these developments. According to experts, such a solution will make the entire BTC network ecosystem more decentralized.

In addition to the manufacturers already listed, the Japanese GMO Internet is also working on this topic, planning to use new integrated circuits, primarily for its own needs (its own mining farm), but there will also be an offer for the consumer market. The company's chips are planned to be made four times more energy efficient than those currently available, which means the elimination of all competing companies that adhere to old standards.

It is impossible not to mention the Chinese company Bitmain, which was recently invested with $50 million, and which will also use this money to develop and launch new chips.

So, despite the forecasts of skeptics, the industry continues to develop, and since such well-known companies are investing in it, that means there is a reason for us to be more optimistic about the future.

1. Russia has finally gotten around to digital currencies and technologies. It is no secret that in the Russian Federation the cryptocurrency sphere is absolutely not regulated; it seems to not exist, or rather, should not exist, according to many officials. This attitude is explained by the fact that it is practically impossible, or at least extremely difficult, to control this area.

In the past year, there have been constant rumors about the imminent ban of digital money in the Russian Federation, although there is nothing special to ban - mining is already illegal.

And finally, the state decided to regulate the circulation of virtual coins in the country, as well as to give a certain status to those digital technologies that are used in the field of finance. In any case, the president instructed the relevant authorities to do this. In addition, specific definitions of a number of concepts must be spelled out, such as “distributed registry”, “token”, “smart contracts”, etc. The deadline for implementation is set at 07/01/2018.

Well, let's wait and hope that our government will approach the issue in a civilized manner. Indeed, in most leading countries of the world, the use of cryptocurrencies is welcomed, and there is no talk of any prohibitions or restrictions.

Cases of abuse

It is curious (and perhaps quite expected) that the rise of cryptocurrencies provoked people with official access to computing power to use it to mine “crypto”. Of course, such actions are illegal, but the prospect of profit outweighed fears, and some took the risk.

Thus, at the beginning of February 2018, news appeared about the arrest of employees of the All-Russian Research Institute of Experimental Physics, who were trying to use a supercomputer running at the institution for mining. The institute, part of Rosatom, is located in Sarov and is engaged in the development and creation of nuclear weapons. In the spring of 2011, a supercomputer with 1 petaflops of power was installed there.

Another case that has become famous is the detention of IT specialists of the Council of Ministers of Crimea for mining in the workplace. They installed mining software on government servers, which was discovered. In December 2017, the system administrator of Vnukovo Airport was arrested for building a mining farm at the Air Traffic Control Center. The attacker was discovered while investigating the causes of constant power surges in the complex.

The management of Transneft, Sberbank and other organizations reported similar problems. Similar situations occur in many institutions, especially those where, apart from the IT specialists themselves who decide to use official power for personal purposes, there is no one else who could identify the fact of abuse of authority.

A type of abuse is the injection of a mining script into the code of the web pages that the user is viewing. Some resources monetize traffic in this way, warning the visitor about it (for example, allowing the user to use part of their processor time, the user turns off advertising in return), but not all webmasters are distinguished by such honesty. To combat illegal mining, special browser plugins such as NoCoin have been released.

Figure 5. NoCoin extension.

Interesting information concerns Sberbank. In November 2022, the vice president of a financial institution reported that the shortage in the domestic video card market was caused by the massive purchase of this equipment by a bank to organize the work of an artificial intelligence laboratory. The technically savvy part of the Internet community did not believe this statement, not unreasonably suggesting that the video cards were used to create a secret mining farm.

Profitability calculators

There are several websites that provide cost-effectiveness calculators to help with the calculations. You just need to enter parameters such as hardware cost, hash rate, power consumption and the current price of Bitcoin to find out how long it will take to return your investment.

Calculators for the profitability of mining various cryptocurrencies are offered by sites such as ASIC Trade, BitsMedia, BitcoinWisdom, CoinWarz, BTCInvest, LiteCoinPool. In addition, there is a Telegram bot WhatToMineBot, which allows you to calculate how much money the mining of different currencies will bring under different initial conditions.

Always keep in mind that with the same data at the same point in time, different resources can give different results.

Source: cryptocurrency.tech

Is there any point in mining in 2018?

It doesn’t matter whether you mine cryptocurrency “at home”, on your own equipment, or buy a cloud contract: all this can be called in one word – an investment. And the investment must be profitable or at least not unprofitable.

The story with Bitcoin and other “cryptocurrencies” in 2017 made many think that it was time to act and also “catch the wave” before it was too late. Those who purchased equipment in the early to mid-year did manage to make some profit. But now everything is not so clear.

There are several factors that should influence the decision whether to mine or not:

• Increasing complexity. Its increase leads to the need to use greater computing power, and it becomes more difficult to mine a new block and receive a reward.

Figure 6. BTC difficulty growth chart over 12 months.

• The complexity of coins trading for any “tangible” money is increasing, and mining others that still have little weight in the market may turn out to be unjustified, since the income will not cover investments in equipment.
• Price for hardware. Both video cards and ASIC miners are expensive: prices start from 700 USD for the simplest video card suitable for mining, up to tens of thousands of dollars for an ASIC. And the secondary market offerings are not helping: previous generations of equipment already have insufficient capacity to mine “large” coins without generating enough profit. Although you can try to participate in the mining of new projects and “cryptocurrencies”, which still have a low price and complexity.
• Consistency of investment. You should not think that once you purchase a farm or ASIC, you will be able to safely reap the benefits. The equipment will have to be updated, because over time its power will no longer satisfy the increased complexity of the network.
• Systematic reduction of rewards for solving a block for some currencies.

An important aspect is issues of government regulation. Thus, the Chinese authorities are actively pursuing a policy to combat mining; in the Russian Federation, the government also plans to introduce legislative regulation of this area. Although the prospects are not yet clear, given the general direction of government rhetoric in the field of cryptocurrencies, restrictive measures will be taken. And this should be taken into account, especially in investments for the medium and long term.

You can calculate the current mining profitability yourself using special resources - for example, Whattomine. It allows you to calculate the approximate profitability of mining different currencies based on the parameters of the available equipment.

It is important to understand: mining bitcoin and ether on equipment even of the previous generation is not profitable. You should choose other projects that are less complex.

Figure 7. Whattomine interface.

Farms – is it worth buying?

If funds allow, you can assemble a farm from several video cards or miners. Important things to consider:

• Energy consumption;
• quality of wiring in the room;
• availability of cooling and ventilation;
• power supply stability;
• noise level (it is not advisable to install such devices in a residential area);
• Internet connection quality;
• prospects of the currency chosen for mining.

Figure 8. Farm of 6 GTX1060 video cards.

You can also purchase a ready-made farm. They are supplied by many companies specializing in mining software and hardware.

Bitcoin and coins based on some other algorithms (Scrypt, etc.) are mined today mainly on ASICs. The miner's task is to perform calculations to open a block in the BTC blockchain, for which a reward will be received. The most popular SHA256 model today is AntMiner S9, which produces up to 14 terahashes and consumes up to 1.5 kW. The average cost of one device is 150-200 thousand. The daily income from the operation of such a device, at the exchange rate at the end of February, will be about 12 USD, before deducting electricity costs. On average, you can count on about 9-10 USD of net profit in bitcoins per day. Accordingly, the more devices there are in the farm, the higher the income, but energy consumption will also increase. The profitability of other currencies is calculated in a similar way - you can enter data on the miner into the Whattomine calculator and get the result.

For altcoins using other algorithms, you may need your own miners: for example, Bitmain Antminer D3 ASIC (it mines Dash using the X11 algorithm).

GPU farms are used for mining currencies using the Ethash (Ethereum) algorithm, etc. Ready-made solutions are supplied by many manufacturers: for example, the Moscow company Bitrock offers solutions on 4, 5 and 6 GTX1060 video cards with a hypothetical income of 12, 15 and 18 USD per day accordingly. The price ranges from 189 to 300 thousand rubles, depending on the number of cards and design (case type).

You can buy a farm if you want to invest in the mining of “serious” cryptocurrencies, such as Bitcoin or Ethereum, or you are confident in the imminent rise of a less popular coin that can be mined immediately and in large quantities for the future. If funds are limited, investing in ASICs and video cards seems impractical, and it is better to turn to cloud services (or mine the most promising coins that have not yet reached prices using existing equipment).

Cloud mining.

Among the “clouds” we can cite:

• the previously mentioned Genesis Mining;
• HashFlare.

These are proven services that offer flexible tariff plans.

Figure 9. HashFlare tariffs.

Figure 10. Genesis Mining tariffs.

Cloud mining allows you to “enter” the mining of cryptocurrencies at relatively low costs, while making a profit (albeit less than in mining on your own powerful equipment).

Thus, for 2022, we can recommend taking a closer look at cloud solutions, as well as monitoring the emergence of new and the development of old, but undervalued altcoins, distributing computing power and investments so as to mine what is most profitable in the near future, or has the potential to growth. It is difficult to predict what will happen in the long term, since the cryptocurrency market still remains poorly predictable.

A good example is Dogecoin - its current price is around 0.006 USD, although it briefly rose to 0.01 USD in January. Many continue to consider this Scrypt coin as undervalued, and its mining as a promising activity.

One opinion on Bitcoin mining:

Where to begin?

Decide on the currency. The mining process involves solving complex cryptographic problems so that miners can provide Proof of Work. This is a distribution algorithm that involves the active role of participants in data mining. The more a participant “works” and the higher his computing power, the larger the reward.

There are two main hashing algorithms that require Proof of Work: SHA-256 and scrypt.

SHA-256

The SHA-256 algorithm requires pure computing power. In the early days of Bitcoin, it was possible to effectively use GPU and CPU processors on a regular home computer. However, that time has passed.

Now the level of complexity of Bitcoin has increased so much that specialized processors called “special purpose integrated circuits,” or ASICs, are required for mining. The use of such powerful processors and the rapid increase in Bitcoin's complexity have created a technological arms race, meaning that even recently developed chips can quickly become obsolete.

Scrypt

This algorithm requires large amounts of RAM and parallel processing capabilities, so GPU mining is quite relevant here. In addition, ASICs for scrypt have not yet been created, so the level of complexity here does not increase so rapidly.

A few examples

Let's look at a number of examples of changes in profitability for 2022 and the beginning of 2018.

Bitcoin – is it profitable to mine now?

As mentioned earlier, by the end of 2017, the difficulty of mining Bitcoin jumped sharply. The profitability of mining has changed similarly: for example, if on February 20, 2022, earnings on a conditional ASIC miner with a speed of 14 terahash (theoretical maximum for S9) were about 7.99 USD per day, now the daily profitability will be about 12.

It is important to consider that such growth became possible only due to the growth of the exchange rate. If BTC were worth about 1000 USD, the income would be significantly lower.

It can be assumed that the complexity will continue to grow, and Bitcoin mining will become the prerogative of large farms with sufficient capacity. It is no longer profitable to mine it yourself; in order to create a competitive farm, large expenses are required.

Zcash

In January 2017, mining this coin on 5 RX480 video cards brought about 0.1 ZEC per day, or 4 USD. Since then the rate has increased:

Figure 11. Zcash rate chart.

The complexity has also increased:

Figure 12. Changing the difficulty of zetcache.

Taking into account all the data, Whattomine on similar video cards today shows a profitability of up to 5 USD per day. That is, the rate was compensated by an increase in complexity, and the trend is likely to continue: more and more powerful equipment will be required for mining.

Broadcast in 2022

Figure 13. ETH difficulty chart.

Figure 14. Ether exchange rate fluctuations.

A farm of 4 nVidia 1060 cards with 6 GB of memory brought the owner about 6-8 USD. Now the complexity has increased, according to rough estimates, the amount of income has even decreased - after deducting energy costs, 5-6 USD will remain.

Dash

Figure 15. Dash price chart.

Figure 16. Dash mining difficulty.

The last graph shows a sharp jump in difficulty. Today, an ASIC for 15 gigahashes will bring about 2 USD, although at the end of last year whattomine showed about 6 USD per day. Without the growth of the coin and on weak equipment, it is worth taking a closer look at mining more profitable altcoins, although if the price rises, the profitability of Dash will also increase.

Assemble the Equipment

Depending on your budget and the type of currency you intend to mine, there are two options for setting up your mining system:

DIY mining farm.

It can be built using a PC and as many graphics cards (i.e., GPU processors) as you can afford. Some people use non-standard cases instead of PCs, for example, beer crates, where the air circulation inside is higher. Home installations allow you to simultaneously engage in CPU and GPU mining.

ASIC

ASICs are stand-alone devices with a USB or Ethernet port that can be purchased from the manufacturer. ASIC miners are typically more expensive than DIY rigs and are mostly made in the US, which means that those in other countries will have to pay extra for shipping.

Key characteristics when choosing a video card

• Video memory volume . Here you should choose according to the principle “the more, the better.” Solid performance is provided by devices with storage capacity of two gigabytes or more. Ether mining on a video card with such a capacity gives the best self-sufficiency indicators.
• Memory speed . If you are wondering which video card is best for cryptocurrency mining. It is advisable to have a card with DDR 5 memory - in terms of the balance of energy consumption and computing power, they currently have no analogues on the market.
• Bus width . It is worth choosing solutions only with a 256-bit bus - 128-bit ones are several times inferior in performance to their modern counterparts. The mining speed on video cards with an old bus is several times lower, and mining itself from scratch on a video card is almost impossible.
• Cooling . Despite the fact that this item is the last on the list, it is the most important - the power of video cards for mining also depends on it. In the field of coin mining, solutions from Radeon perform best - they not only have a well-built active cooling system, but are also less susceptible to wear and tear due to long-term continuous operation.
• Overclocking capability . This is not such a significant advantage, it does not speed up mining on every card - no matter what video card you choose, it is worth studying how it behaves when mining coins. Correctly overclocking a video card can give you an additional advantage of 20-40% of the original power, but it also requires unnecessary device setup, and in this case the earnings may even be lower.

When assembling a mining rig, a configuration with 4 identical video cards is most often used. These are the most stable systems that bring the least number of problems during operation and configuration, and motherboards with 4 PCI slots are cheaper and appear on sale more often.

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