Is Bitcoin Mining Still Profitabel?

Bitcoin Mining has developed into a separate line of business in which companies from China have taken the lead. But couldn’t one still benefit from focusing on the mining and subsequent sale of new BTCs in this country?

Bitcoin Mining is a recurring topic in the crypto-scene, not least because there are theses that Bitcoin miners can influence the price of BTC. Meanwhile, it is clear that China dominates the Bitcoin mining business worldwide. It is there that the specialized hardware (ASIC miners) is manufactured and the large mining pools are based in China. But as is well known, Bitcoin Halving took place in May 2020 and, at least theoretically, changed the basis for calculating the profitability of BTC Mining. So let’s take a closer look at the situation.

Bitcoin Mining – how does the calculation of effort and profit work?

Since the latest Bitcoin Halving, there is 6.25 BTC as a reward for activating a new block. The level of difficulty is adjusted after 2016 (approximately every two weeks) and is based on the rate of increase in the entire network, i.e. the computer capacities gathered there. The hashrate and level of difficulty at Bitcoin have recently reached all-time highs, demonstrating the fierce competition between the Bitcoin miners, but also the fact that at current prices of more than 10,000 US dollars per BTC, the deal is worthwhile for the big miners.

In addition to the Bitcoin price, they must also keep an eye on their fixed costs. On the one hand, there are the costs for the acquisition of new and efficient hardware, and on the other hand the electricity prices. An Antminer S17+ as a widely used device now costs around 2,000 euros in Europe and, according to the data sheet, has a hashrate of 73 TH/s at 2920 watts power consumption. For the large brother Antminer S19 pro a purchase price of around 3,300 euro with 110 TH/s and 3500 Watts is to beech.

If one interacts now for instance in the computer for mining profitability with such values here, it turns out fast: The break-even point for profitable Bitcoin Mining is at present with electricity prices of 10 cent per kWh in range. In Germany, however, 30 cents per kWh are more likely to be planned and profitable Bitcoin mining is simply impossible when electricity prices and hardware costs are taken into account. The situation is completely different in China, where electricity is available in certain regions for around 5 cents per kWh. In addition, there are no high transport costs, currency exchange fees and reseller surcharges for the ASICs.

Is cloud mining profitable?

Cloud mining was particularly popular in 2017 and 2018. But it turned out that very many dubious providers were working in this area. It doesn’t make sense for successful miners to offer Cloud Mining. It is therefore advisable for everyone to keep their hands off Cloud Mining.

Alternative approaches for profitable Bitcoin Mining

In the USA, projects in which power plants use surplus energy for Bitcoin mining during periods of low demand have attracted attention. A start-up company called Layer1 with star investor Peter Thiel wants to go another way. Layer1 wants to generate cheap solar and wind power in Texas itself and even develop its own ASICs. In Germany, the listed Northern Data AG recently had to experience doubts about its business model, because electricity prices, acquisition costs for hardware and earnings do not quite match here.

Conclusion: Leave Bitcoin Mining to the professionals

For you as an investor it is certain with these model calculations: With own Bitcoin Mining from Germany no money is to be earned and would become if necessary with new Alllzeithochs in the price of BTC again interesting. Hashrate and degree of difficulty in the Blockchain of Bitcoin remain for you however good indicators in addition, how it stands around the profitability with the professional Minern and whether they – as at present – optimistically into the future look. For investors it is thus always better to buy the Bitcoin directly and leave it lying.

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