In light of recent events, mining is becoming less relevant. One of the largest pools F2Pool voiced information that since the middle of November more than 600,000 devices were turned off, which became simply unprofitable when mining Bitcoin . As the head of the pool, Mao Shisin , noted , these pieces of iron were simply useless and “sold by kilograms”. Also, the Norwegian government decided to cancel the program of subsidizing enterprises that mined cryptocurrencies. What to expect next?
Miners whose devices mine cryptocurrency using the PoW (Proof of work)algorithm receive a reward in the network cryptocurrency for confirming transactions and building new blocks. The success of these operations is affected by device performance . The higher the computing power , the more realistic the chance to get a reward, because the ratio to the performance of the entire network is taken into account. For this reason, doing cryptocurrency mining alone is no longer relevant . The more popular a cryptocurrency becomes, the more miners it attracts, which entails an increase in the complexity of its mining. This approach allows you to keep under control the process of issuing coins .
Cryptocurrency mining crisis
One of the biggest vulnerabilities of PoW networks is precisely that with the increasing complexity of mining, more powerful equipment is required, and mining requires ever-increasing energy costs. As Mao Shisin says , this is the main reason why miners get rid of their equipment. “The old devices have become simply useless, so they get rid of them, like scrap metal.” The main asic miners that have been disconnected from F2Pool lately are the Antminer S7 , Antminer T9 + and AvalonMiner 741 devices .
The same trend can be traced in other markets. So, on the Ukrainian and Russian sites of free ads, only in the last two weeks, the number of ads for the sale of farms and mining equipment has increased by 25% . Moreover, whole companies whose activities were related to the extraction of cryptocurrency, announce the closure. For example, Russia Mining Coinholding announced the suspension of work due to “economic inexpediency in the current conditions” . As Dmitry Marinichev , one of the founders of the RMC , explained , at the moment electricity costs exceed income fromof mining .
In Norway , a program of subsidizing enterprises that were engaged in mining worked for quite a long time . However, in the local edition of Aftenposten , information appeared that as of November 21, taxes for such companies are rising from $ 0.056 \ kW to $ 1.93 \ kW. In a recent Forbesarticle , it was noted that according to a Northern Bitcoin study , it takes about $ 7,700 to extract one BTC .
One of the representatives of the Norwegian Parliament , Lars Haltbrekken,stressed that the country cannot continue to provide tax benefits to such a “polluting” process as bitcoin mining . The huge amount of energy that is needed for this contributes to a large emission of greenhouse gases. ICT Norway’s chief economist Roger Shierwa said in an interview with Aftenposten that this was an unexpected decision that was made without any warnings and discussions. In the light of such events, miners will have to move their facilities to Sweden or Denmark .
In addition to the disadvantage of mining cryptocurrency on older devices, there is a more serious problem. Scientists from the Oak Ridge. It notes that PoW mining requires more energy than mining . When comparing, mining costs of bitcoin, ether, monero and lightcoin were taken into account in relation to the extraction of gold, copper, aluminum, platinum and some rare-earth metals. . So, to figure out cryptocurrency at $ 1, you need 9MJ for Ethereum. 11MJ for Monero, 15 MJ for Litecoin and as many as 19 MJ for BTC. At the same time, in order to extract copper at $ 1, you need only 4 MJ, gold requires 5 MJ, 6 MJ is required for platinum mining, 9 MJ for rare-earth metals and only aluminum requires 122 MJ.
Manufacturers of equipment used for mining cryptocurrency , also noted significant losses. Companies Nvidia and AMD warned investors that revenue for the current quarter will be lower than anticipated due to the collapse of the market cryptocurrency and reduce the demand for products.
Huang Renxun , the head of Nvidia, published a financial report explaining that the crypto market was overestimated due to which the cost of excess stocks increased fivefold. The main reason is that the cost of the video card did not have time to fall to an acceptable level after the “crypto-boom . ” The very next day after the publication of the report, the company’s shares fell by 17% . A similar picture is observed in the financial report of the main competitors of Nvidia – AMD . Their total revenue for the third quarter decreased by 14% .
The situation was explained by Mitch Stevens , an analyst at RBC Capital Markets . If in the last quarter, mining cryptocurrency with the help of video cards brought substantial profit, now things are different on the market. According to the company, the Ethereum payback threshold is at $ 175. This is the most profitable cryptocurrency for mining using video cards . At the current price of $ 115-120, work will be at a loss. According to the expert, the negative effects of the collapse of the cryptobank on this quarter will not stop.
As a result, we note the words of Igor Zartdinov , co-founder of the ICGcrypto fund, and the head of the Enigma company . Igor said that in the current situation, private mining is unprofitable and brings profit only to those who do it on an industrial scale. Perhaps in the future the picture will change, but at the moment “home mining” is not the best investment option.