If you’re mining bitcoin from home, you’re now losing money

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#1


via marketwatch

Bitcoin mining was once, as close as you could get to free money. You plugged in your computer, which began solving complicated mathematical problems on the bitcoin ledger, and you were rewarded with bitcoin.

Now, 10 years on since the first bitcoin was mined, competition to solve these complicated puzzles on the blockchain has surged making that free money not so free.

In fact, it’s become so saturated that retail miners who are plugging in their PCs, hoping to earn a quick buck, are now losing money, according to data from Diar, a blockchain and data analytics firm.

The company says the rise of institutional mining companies have squeezed retail miners margins. “Bitcoin miner revenues in the first 6-months of this year surpassed all earnings of 2017,” said Diar. “To date, revenues have exceeded last year by a whopping $1.4Bn. But the record hash rate hit at the end of August saw miners paying retail electricity prices move to unprofitability for the first time in September.”

Mining profitability

The hash rate is a measure of the computing power required to confirm a bitcoin transaction. As competition swelled, so did the hash rates, which in turn drove up electricity bills as miners scrambled to ramp up their mining equipment.

However, these costs have reached levels where only institutional companies can foot the lofty electricity bills, Diar research found. “The investment proposition for smaller miners held true throughout most of this year, but has since become questionable on the back of an increase of computing power competing for the coinbase reward.”

In May, an Elite Fixtures survey found that the average cost to mine a bitcoin in the U.S. was $4,758. But rising electricity prices and mining hardware costs would suggest this average cost has climbed.

Hash rate

Furthermore, the plight of miners has been exasperated by the decline in the price of bitcoin. BTCUSD, +0.32% The world’s largest digital currency has fallen more than 50% year-to-date and is down more than 60% from its all-time high on Dec. 17, 2017.

So for retail investors, unless you’re a student pilfering electricity from your dorm room, rewards from mining are dwindling away. “With big mining operations on low electricity costs running at anywhere between 50-60% gross profit from bitcoin revenues, the market has a lot of room left to grow and, profits to squeeze,” said Diar.

“But bitcoin mining has, at least for now, and most likely in the future, moved into the court of bigger players with deep pockets.”


#2

Important to note… while this be true/soon be true for bitcoin, its not true for all crypto. several coins are still mined at home at a hefty profit.


#3

XMR amazingly efficient mining on most CPU and GPU’s <3


#4

I agree completely these articles about profit from mining do not get or see the bigger picture. For example they mention “rising electrical prices”. This is a false statement in that electrical prices are not rising the electrical cost to mine a bitcoin is rising as the difficulty rises. Those are two completely different metrics. The average price over the last 18 years has only went up 50% from 8.5c/kWh to 11.4c/kWh. I know in large metropolitan areas this may be much larger and in different countries but most mining farms are placed in areas where the percent increase is much smaller.

Whether you are a big player or small player the rewards are linear so stating that only the big boys can mine is a bit false. If 1000 miners are profitable at 10c/kWh then 1 miner is profitable at 10c/kWh. I hate these arguments about you have to be at scale to be profitable. Just making this statement shows a very basic lack of knowledge in how mining works.


#5

If you scale the 10c / KWh falls.


#6

Just curious though, if someone mines say, 25 cents worth of BTC :btc: today at a level of $6500 and then BTC goes to say, $650,000 that same BTC :btc: would then be worth $25.00. :thinking: Would it then be worth the cost?


#7

For most people no. Just buy 25c’s worth of BTC instead.


#8

…**** ah but the joy of participation in the process. :jigsaw: What if you mined that same 25 cents of BTC :btc: with excess solar power from a Tesla Battery bank used to power your of grid home? :thinking::thought_balloon:


#9

You missed the entire point of that statement. Secondly scale doesn’t always lower your cost. For example in the area of Texas I live my house gets the same rate of electricity as the 10MW Data Center. Sometimes there are no discounts.

But the point of my statement is that no matter what “scale” you are mining at whether it be one machine or 1000 machines at any given electricity cost the profit per machine is the same. The price you pay for electric is what determines if it is profitable or not. NOT SCALE. Sure if you go larger you may get a discount on electric but again the price of electric is the only thing that matters when looking at this.