Economists, investors, and consumers have been paying close attention to cryptocurrency for years, but especially after Bitcoin (the world’s most popular cryptocurrency) exploded in value toward the end of 2017. Since then, the volatility of the digital currency has led to unpredictable price swings, but the fascination continues.
Millions of people are now either looking into or are already pursuing crypto mining, the process of using your own computer rig to supply processing power to a cryptocurrency’s network. The simple version is this: occasionally, your processing efforts are rewarded by a fixed amount of the cryptocurrency you’re mining. If you have enough processing power to contribute, you can eventually land yourself a significant amount of currency.
Still, crypto mining isn’t a get-rich-quick-scheme, nor is it a way to get free money. There are significant time and monetary costs involved, and the overall profitability of mining seems to decline every day.
So is crypto mining even profitable in 2018?
The Basics of Crypto Mining Profitability
There are a few separate variables you’ll have to consider when getting into crypto mining.
- Costs. It seems like crypto mining is free, since your computer will be what’s doing all the work. However, there are significant costs associated with the endeavor. For starters, you’ll need to buy the equipment necessary to get your rig in operation. Depending on what you currently have available and how much processing power you want, this can cost hundreds to thousands of dollars. The bigger and more expensive the rig, the more you’ll be able to mine (usually). You’ll also need to consider that your rig will be drawing electricity continuously, and electricity costs money; if you’re not careful, you could consume more in energy than you produce in cryptocurrency.
- Income. You’ll also need to consider how much you can mine per day. This is often based on processing power, but luck is also a bit of a factor, since the crypto currency rewards only go to the first rig to offer a correct solution to a given problem. To hedge risk and stabilize income, many miners get together in aggregated pools, which combine processing power and split the rewards. The only downside is that most pools skim a fee off the top of your profit, increasing your costs further.
- Options. You should also know that there are multiple cryptocurrencies out there. Major players like Bitcoin and Ethereum are established and popular, but there are also newer cryptocurrencies with less competition and higher volatility.
If you don’t feel like crunching the numbers yourself, there are several free online calculators that can help you estimate the profitability of your current rig.
How the Landscape Is Changing
The profitability of crypto mining is also changing, across the board, due to these factors:
- Tricky techniques. Crypto miners are experimenting with new techniques and new approaches. According to Cato Networks, crypto mining has become a cyber security threat for some businesses; miners will seize control of some of a company’s computing resources and exploit them their processing power, slowing down their machines with background calculations and consuming electricity. This makes it harder for white-hat, everyday users to enter, since it increases competition and makes mining less straightforward.
- GPU costs. GPUs, central components in mining (but also gaming, video streaming, and other important computing functions), have skyrocketed in price due to the popularity of crypto mining. This makes it four to eight times more expensive to build a rig and get into the game. Accordingly, it takes far longer to break even on your investment, and smaller rigs are practically outclassed.
- Popularity and activity. The sheer popularity of crypto mining is also making it harder to achieve a predictable stream of income. With so many people competing and so much processing power available, even crypto pools aren’t a guarantee of revenue—at least for the biggest, most popular cryptocurrencies.
- New currencies. The popularity of Bitcoin has led to the rise of dozens of new copycats, and there seems to be a constant rollout of new currencies to choose from. Most of them are likely to die out quickly, after a burst of volatile price changes, but they provide technically profitable alternatives to the highly competitive major names.
So can crypto mining be profitable in 2018? The short answer is yes, but that doesn’t mean the profitability is accessible to the average person. If you’re skilled at building crypto mining rigs, have a way to keep energy costs down, and are willing to take risks on new currencies, there’s a decent chance of becoming successful. But if you want to latch onto the Bitcoin trend with a small personal computer, don’t expect to mine enough to make up for the costs.
For contribution enquiries, please email us.