Industrial mining Bitcoin: revenue grows, profitability fades

Industrial mining Bitcoin: revenue grows, profitability fades10.10.2018

Industrial mining Bitcoin: revenue grows, profitability fades

According to a new study by analyst Diar, despite the fact that this year Bitcoin miners received a record income of 4.7 billion dollars (which already exceeds last year record), a number of factors, including  competition and increasing computing power, make mining less profitable than ever. As a result, the market has created a situation that threatens the existence of small mining companies and forces large mining pools to fight for a place in the sun.

According to a study, China is still a country that is profitable for mining cryptocurrency. This is one of the few countries offering low electricity prices, which makes Bitcoin mining economically viable. Thus, the average cost of energy consumption here is about $ 0.08 per kWh, and in some regions it is significantly lower. However, if we add to this figure the cost of renting and maintaining premises, equipment, the cost of paying salaries and other costs, amateur mining becomes unprofitable even in China.

Analysts say that the current situation on the market is more conducive to the survival of large mining pools, including those owned by the leading Chinese manufacturer of mining equipment, the company Bitmain. True, Bitmain claims that most of its profits accounted for sales of Antminer mining devices - in particular, 95% of profits for the first half of 2018 came from sales of ASIC miners.

The data also shows that the Bitmain mining strategy is directly related to the sales strategy of its equipment. According to representatives of Diar, now Bitmain positions itself as a manufacturing company that controls a significant proportion of the Bitcoin blockchain hashrate, the ultimate goal of which is to ensure that the mining remains profitable for all miners. After all, if the miners will earn money, they will continue to buy equipment.

Of course, Bitmain mining pools also remain profitable as a by-product, which is especially important for the company's new offices in North America, the maintenance of which is much more expensive than enterprises in China due to the high cost of electricity.

As a verdict of the existing Bitcoin Mining condition, the report states the following:

“It is unlikely that the observed decrease in hashing capacity will continue. Considering that large miners with low energy costs function in conditions of 50-60% gross profit, there is still a lot of free space on the market, but profits will continue to decline. Now and, most likely, in the future, the mining of Bitcoin will be concentrated in the hands of large players with great financial potential.”

Back to articles