Is Bitcoin Mining Still Profitable

If you have been following cryptocurrency mining over the past couple years or so, you have probably heard, or may have even seen first-hand, that crypto mining, especially crypto mining for bitcoin has become next to impossible to do profitably for anyone other than huge mining co-ops and organizations like Genesis Mining or CCG Mining. These organizations offer cloud-based mining opportunities, as well as the option to purchase mining rigs directly from them in some cases, and these organizations make most of their revenue, from common folks like you and I, that buy their mining contracts. It’s the old truism: “Who got rich in the California Gold Rush? Merchants selling picks and shovels.” Some things haven’t changed in 150 years, other than the tools used for mining – mining cryptocurrencies that is.

The little guys, like you and I, who want a chance to mine a few bitcoins over time in the hope we will see record appreciation don’t really stand much of a chance right now. The reality is, the amount of capital required today to mine bitcoin is prohibitively expensive for your average crypto miner running a couple rigs in the spare bedroom. Sure, if you happen to come across some used hardware in great condition, and you’re not based in the U.S. where you’re probably paying on average .11c to .14c a kWh for electricity AND you can place the rigs in a location where you can keep them cool and the noise won’t bug you, well, then you just “might” have a chance at it.

And if you have to buy new rigs, or at least a rig or rigs plural with new GPUs, well you may be able to build a profitable mining rig, if you ignore “cost to buy”. Yes, you read that right. If you have to ask; don’t ask. A new rig may set you back several thousand dollars up to as much as $17-$20k, with a break-even point far too long into the future; thus, causing you to potentially make yet another bad investment decision. But hey, just write it off as education.

At least that’s at current bitcoin prices anyway. At today’s bitcoin price of approx. $8000, on average you might expect to make somewhere around $6-$11 per day running a small cloud-based mining contract with one of the aforementioned companies. In fact, some companies even close customer accounts because they’re falling below the minimum threshold to cover the monthly maintenance fees. The story and revenue model change a bit as bitcoin prices increase to the point where it’s actually quite profitable to mine. It’s not that unlike actual mining for precious metals where if silver or gold drop below a certain price threshold, it simply becomes unprofitable for small mining companies to continue mining operations. They simply shut the mine down temporarily and pick up mining again once the prices for gold and silver increase again. Larger mining companies are able to sustain small losses for extended periods of time.

I’ll pick another article to go into more technical details like crypto price stability, hash rates, mining difficulty level, coin having, etc. But if anyone has experienced significantly better results mining bitcoin lately with cloud-based contracts, please drop me a line and I just may consider signing up for a mining contract myself.  My advice; log onto Coinbase or Binance and buy your coins directly. Or better yet, maybe just invest in Nvidia (kidding – sort of).

For those OCD types (no offense), and I may just be talking about myself; here is the answer to the original question as to whether or not mining for cryptocurrencies is dead. I would argue the answer is an unequivocal “NO”. Without getting too technical (plenty of time for that in another article); there is still ample opportunity to try and mine many different ALT coins; coins like Litecoin, Monero, Eth, Ether-1, AION, etc. With many of these ALT coins you can still set up “reasonably” inexpensive mining rigs, or purchase mining contracts with GPU based rigs.  GPU rigs,  known as Graphics Processing Unit rigs, use the computing power of the GPU to run mining algorithms. The alternative to GPU mining, if you want the Big-Boy coins like bitcoin, is to use ASICS-based mining rigs. ASIC stands for Application Specific Integrated Circuit and, is as its name implies, is purpose built for the application at hand, albeit networking, or in our case mining for a specific cryptocurrency and typically only that one cryptocurrency.

If you are still thinking that cryptocurrency mining is becoming a dying breed, at the MicroBT M20 Conference in Chengdu, China this past month, Charles Song, the general manager for Samsung Foundries China, revealed to attendees that the company had been designing and manufacturing 3nm and 5nm chips or bitcoin mining. According to Mr. Song, Samsung had been fabricating these chips since Q1 2018; just over a year ago. Samsung also publicly announced its strategic partnership with MicroBT, the third largest designer of bitcoin ASICS behind Bitman and Canaan.

You don’t get a company like Samsung investing in the design of next-gen ASICS for an industry that is going away anytime soon. We may still be in early innings in this whole Crypto game after-all. Happy Mining…