Bitcoin Mining, the process of bringing new coins into circulation has been in existence since the creation of BTC over 10 years ago. It is a venture in which miners expect to make profits just like BTC traders who trade for profit.
During the 2018 bear market however, mining became unprofitable at a point. This led miners to shut down their mining farms as the cost of running mining rigs far surpassed the revenue generated.
During this time also, crypto mining equipment producer Bitmain recorded low patronage for mining gears which led to reduced revenue. Also last year, inventor of GPU miners Nvidia recorded so low demand for its mining GPU that it decided to quit crypto.
According to an article published by Wall Street Journal at the time, the company was letting go of crypto-related products due to a declining demand which it foresaw in the second quarter of 2018.
Things have changed
Although the lack of profitability in BTC mining continued till early this year, the condition has turned around.
According to BTC mining update given by Fundstrat Global Advisors, mining is now profitable for all mining rigs, both old and new, considering the cost of mining 1 BTC.
The report says Bitmain’s S9 Miner for instance, costs $8500 in total to mine 1 BTC at $0.06/KWH.
At the current price of BTC at $10,273, a miner could get ove $1500 in profits for each BTC they mine.
The total cost is gotten by adding the cash cost per BTC to the depreciation per BTC as illustrated in the figure above.
For older generation miners such as S9 and WhatsMiner M10, the cost is $8,528 and $7,351 respectively.
For newer generation miners including Bitmain’s S17,ASICminer 8 Nano Pro, MicroBT Whatsminer M20s, Ebang Ebit E11++, StrongU STU-U8 and Innosilicon T3+57T.
The one that cost the most to mine 1 BTC is the S17 Pro with a total cost of $6,299. The least costky to mine 1 BTC is the Innosilicon T3+57T which adds up to $5,126.
Considering miners get rewarded with 12.5 BTC for every block the mine currently, this is pretty profitable compared to 2018 when they operated at a loss.
Bull market effect?
The lack of profitability of BTC mining in 2018 was arguably due to the bear market that brought BTC price down to $3200.
Could the current profitability be as a result of BTC’s bull market which has so far brought up the price over 200% so far in 2019?
The number one cryptocurrency will be experiencing halving in May 2020, when the block reward will be reduced to 6.25 BTC from the current 12.5 BTC per block.
Based on past data, the price is expected to surge significantly, possibly to a new all-time high price. If this happens, will mining get even more lucrative despite the cutting of block rewards by half?