all articles

Is Crypto Mining Worth It?

October 3, 2022
12
min. read

Bitcoin mining is a very energy-intensive competition of computing equipment in order to get Bitcoins as a reward. If you are seriously considering whether mining is worth it for you, you have most likely already figured out your cost expectations. In addition, you are probably aware that the mining business has become so large that there is nothing for a private trader there. All you can do is join a large mining pool and share the rewards with everyone. Stories about how “another single miner got a block” should be treated the same way as publications about “a dude from Texas who won a billion in the lottery.” These events in no way cancel out the reality in which the majority is content with little. So, is mining crypto worth it? 

Well, not everything is so clear. If you approach mining as a long-term business, and have some infrastructural advantages, you can earn good money in today’s reality (1Q2023), namely in the reality of large mining pools and regular Bitcoin drops to the lower edge of profitability. What’s the right way to act?

The fastest way is “I'll start, and then we'll see.” There’s nothing wrong with it - it’s a creative process of trial and error, which, under certain conditions, can fill your life with both experience and money. Another way is to try to objectively assess your strengths and estimate the potential profitability. 

Let's say you have legitimate access to inexpensive electricity, you are able to patiently find inexpensive miners on the market and have sufficient financial reserves to wait out the “bad times.” So why not dive into mining?!

The Hashrateindex service offers us dry figures that describe our reality
According to HashrateIndex

The Hashrateindex service offers us dry figures that describe our reality. This table shows the energy efficiency of miners in the columns and the price of electricity in the rows. This is a very compelling table for the advanced user. Looking at it, everyone can draw their own conclusions and answer their own question: Is crypto mining worth it?

What is crypto mining?

Millions of words have already been said about 210,000 blocks between halvings, 6.25 BTC per block, the “complex mathematical problems”, etc. That’s all very interesting, but if you want to get into actual mining, rather than just study crypto from a theoretical viewpoint, it doesn’t answer the key question - should you dive in or not? What is crypto mining in the money language? Is it worth mining crypto currency?

How does crypto mining work?

In terms of money, mining works as follows. You buy miners - that’s capex. The more efficient the miner, the more expensive it is, but the lower your opex will be. In the worst-case scenario, the value of your tangible assets may simply be reset to zero, and your opex may grow to unaffordable values. Before starting any business, the question you always need to ask is “What happens if...?” And the calculator will tell you the answer.

BTC ASIC price per model and vs OPEX
According to HashrateIndex

When Bitcoin falls, many relatively large and especially debt-burdened players experience serious problems with covering operating costs, which leads not only to the sale of mined Bitcoins (leading to even greater exchange rate depreciation), but also to the sale of miners. As you can see from the left figure, miner prices are capable of dropping 8-fold, but apparently, it’s not the limit (the perfect time to buy them up!)

The second point is the miners’ energy efficiency. The right figure clearly shows what awaits a miner working on mediocre equipment: opex can drive you deeply into the red even with relatively cheap electricity.

Is crypto mining legal?

Is Bitcoin mining worth it? Let's take a very standard and unremarkable miner Bitmain Antminer S19j Pro with efficiency of 29.5 W/TH and a hashrate of 96 TH/s.

Bitmain Antminer S19j Pro numbers
According HashrateIndex

With an average electricity price of $0.06/kW, you can earn about $4 per day. Evaluate the payback of equipment based on the purchase price, as well as the prospects for its use within 5-10 years.

Is Antminer S19j Pro profitable?

At today's prices, it may well pay off in 1.5-2 years, and then everything depends on the Bitcoin exchange rate, network difficulty and other factors that will shape the new post-halving reality.

Miner revenue and profitability

Pros and cons of crypto mining

Possible profit versus possible risk is a classic investment dilemma. Nevertheless, at the heart of any success lies a certain advantage, a certain strength that you can set off against if not everyone else, then the majority of others like you. Mining is not just about making money, it's about high-tech equipment, building infrastructure, a sense of success when the first Bitcoin is mined, and satisfaction when everything is running like clockwork. 

Like any business, mining is not as much a result as it is a process, and if you find it pleasant, then you already have an advantage over those who don’t love what they do, who don’t have your knowledge, don’t understand the market and are still trying to figure out what is happening with those blocks and the transactions that fill them. The most they can do is crack a crypto joke at lunch. Mining is a real opportunity to earn money in the long term, but it will require considerable patience and thoroughness on your part. It won't be easy.

There are disadvantages in any business, and mining is no exception. There are many vulnerabilities - equipment can fail, Bitcoin can fall, the price of electricity can jump, premises, cooling, taxes, communications… problems can swell up like a snowball. Your patience and ability to solve problems as they arise, or to anticipate them are key qualities for mining. Even your friend, the bank clerk, may one day accuse you of polluting the environment - just remind him how much paper he is wasting.

Is mining crypto still worth it?

For those who have calculated everything and have the means, mining is definitely worth it. However, there are simpler ways, like cloud mining - is it worth it? Not really. Most cloud mining projects did not survive the last crypto winter, and some were a scam to begin with. Natural selection is an important element of evolution. You can also invest in shares of public mining companies, which fell 20-fold in 2022 (the perfect time to buy them up!), which does not negate the possibility of future growth. But there are also ETFs for Bitcoin futures or shares of high-tech companies related to the crypto industry. Let's call it a more passive strategy. 

If you don't want to invest in mining hardware, you can invest in hashrate tokens. In this case, mining itself and everything related to the equipment will remain on the project side, and you will get daily mining rewards as the tokenized hashrate owner. The leading project in this segment is Minto, which successfully survived the crypto winter, and remained profitable even in November 2022 during the FTX collapse. 

The project is absolutely transparent - the entire history of daily BTC mining rewards, hashrate watcher, online broadcast from the data center, smart contract audits, etc. are available on the Minto site. Since a professional team with an obvious edge over any private person manages the mining infrastructure, such indirect mining is a more laid-back option for obtaining daily BTC mining income without investing in mining hardware.

Is mining crypto worth it? FAQ

How long does it take to mine one Bitcoin?

It depends on the mining power (hashrate) of your hardware. As of March 2023, using 10 Antminer S19j miners with a hashrate of 96 TH/s, you will earn $40 per day, i.e., other things being equal, you will need 2 years to get 1 BTC net. However, profitability is much more important than the ability to get a specific amount of Bitcoins. On average, a miner pays off in 1.5-2 years.

How much can you make from crypto mining?

It depends on the number of miners (total hashrate) and profitability, which primarily depends on the electricity price. Earning $4 net per day from one miner, you can well estimate how much 10 or 100 miners will haul in. However, as your farm grows, costs will also grow non-linearly, so be very attentive to scaling problems.

Is crypto mining profitable for beginners?

The path to mining is closed off for beginners. With superficial knowledge and lack of experience, you are very likely to lose money. However, today there are tools that allow you to enter the mining sphere with reasonable costs. For instance, you can buy hashrate tokens of Minto’s mining farm and start earning daily mining rewards starting on the very next day. 

BTCMT tokens of the Minto project are a liquid asset traded on PancakeSwap; you can buy and sell as many of them as you like at any time. Earning on mining by owning hashrate through BTCMT tokens is much easier than owning real mining equipment. In addition, you do not bear any risks associated with miner maintenance.

Is mining worth starting now?

You can start mining at any time if you have the knowledge, capabilities, funds and patience. You should create a business plan and determine for yourself whether your capabilities correspond to the desired profitability level. Everything else is a matter of technique.

Read more articles