Mining in Russia it will become unprofitable if 1 bitcoin costs less than $5900
About 5000 mining devices are imported into Russia every month, according to RACIB. Despite large fluctuations in the course, mining still remains an attractive investment, but already in the perspective of professional use.
Even at the current rate of $ 8000 per bitcoin, mining remains profitable. However, if the pessimistic forecast of Goldman Sachs bank is realized, the "mining" of cryptocurrency in Russia will be on the verge and beyond profitability: the bitcoin rate may fall below $ 5900 per unit, according to the technical strategist at Goldman Sachs Sheba Jafari. According to the author, this is exactly the border, the achievement of which will make mining practically unprofitable even in comparison with bank deposits.
Based on the complexity of the computing network (the amount of computing to create a single digital coin), the critical rate is BTC / USD, at which mining can become unprofitable, depending on many variables, up to $ 5900 per 1 bitcoin. This indicator includes not only the cost of the devices themselves, but also the expenses necessary for its work: electricity, cooling, rent, maintenance staff, transportation, Internet and depreciation.
Moreover, the Bitcoin rate affects not only the profitability of its own production, but also all other cryptocurrencies, which are largely related to its rate as the flagship cryptocurrency.
Hardware basis
A bit of history, so that later it would be clear where difficulties arise when choosing mining equipment. After there were more and more participants in decrypting cryptocurrency blocks, there was not enough computer capacity. Miners adapted to decrypt the video card, having the most appropriate architecture and maximum powerful computing power. Soon the network complexity increased, and the miners began to merge video cards, so mining-farms appeared. One farm on average consists of eight video cards, the exact number depends on the capabilities of the motherboard and operating system.
Due to the constant increase in network complexity, technological progress could no longer significantly increase the speed of calculations, so the number of farms began to grow. The owners of 100 – 1000 mining farms began to appear in the world, and placing them required huge areas.
Chinese computer manufacturing factories reacted to this. They created specialized processors that quickly performed mining operations for certain types of currencies, and thus appeared ASIC (application specific integrated circuit). They were created for industrial miners. ASIC was more convenient to deploy, easier to configure, easier to maintain, and they are much more efficient than video cards for its crypto-currencies.
ASIC devices can mine a limited number of cryptocurrencies - Bitcoin, Litecoin, Dash and Siacoin. Many other cryptocurrencies with a similar algorithm can also be mined on ASIC devices, the rest are created on farms with video cards.
Mining profitability
Profitability largely depends on the rate of cryptocurrencies and the complexity of the network. At the beginning of 2017, when the bitcoin rate was around $ 700, the profitability of one ASIC or a farm on video cards was $ 9 and $ 7, respectively. At the end of the year, when the rate was $ 19 for 000 bitcoin, the profitability reached record highs of $ 1 and $ 50 per day, but the dependence of the rate and profitability is not direct, since the complexity of the network must be taken into account.
At the same time, the costs can be easily calculated based on electricity consumption: the average power consumption of one device (mining farm or ASIC) is about 1,3 kWh at an electricity cost of 6 rubles per 1 kWh, one device burned $ 3,2 of electricity per day, XNUMX.
Price volatility
The dynamics of changes in the cost of mining equipment is one of the most important details of attention when buying. Sometimes the difference in price in one day can reach 40 rubles. The reasons for such leaps are several aspects: the BTC / USD rate, the excitement - in case of high demand, the manufacturer cannot provide the desired number of devices, but it does not overstate the price, outbid prices begin to dictate, hence the prices in the rest of the market. End stores see this and, insuring the risks associated with delays in their subsequent orders, also raise their prices.
All these reasons are interrelated: as soon as the BTC / USD rate rises, the mining efficiency increases, the payback period falls, and this attracts new buyers of mining equipment. Stores, selling equipment and meeting the hype, raise prices and place new orders at the manufacturing plant. The factory takes orders for three months in advance. New owners of miners, connecting new devices to the network, increase the computing power of the network, and the software automatically increases the complexity of the network, mining efficiency decreases, the payback period increases, the number of new buyers of mining devices decreases, the prices for miners fall back.
For clarity, you can look at the market over the past few months. Until October 2017, the cost of mining equipment was almost constant with weak growth in accordance with demand (for example, the popular bitcoin miner Bitmain Antminer S9 in January 2017 in Russia cost an average of 150 rubles, in October - 000 rubles). But since November 190, when the BTC rate began to rise rapidly, the profitability of mining has grown significantly, the BTC / USD rate has grown every day, each miner brought more USD per day, and, accordingly, the payback period has significantly shortened.
All this instantly reflected in the market, all interested masses of people made the decision to purchase miners, there was a shortage of offers.
In December 2017, when the BTC / USD rate peaked, the payback period of the most popular bitcoin miner Bitmain Antminer S9 dropped to four months, there was a high demand for it, but in fact it was unrealistic to buy it - there were offers to sell the Bitmain Antminer S9 miner at cost over 350 rubles. Equipment suppliers, collecting orders in Russia and placing them in China, at the end of January, taking into account the New Year holidays in China, which take place in early February, predicted a shortage of equipment in Russia for the entire period of January-February.
Output more powerful miners
A dramatic fall in the Bitcoin rate has dramatically impacted the cost of ASIC. But even earlier, another factor had an effect - the emergence of new models. Now prices for equipment for mining in Russia have fallen to the level of summer 2017 of the year. There were offers with prices lower than prices in China, as retailers in Russia were afraid of further decline and selling equipment at purchase price, since some of them purchased large quantities in October, when the purchase price for February was lower than the current value in retail stores in China:
- Bitmain Antminer S9 with a power supply - an average of 160 rubles (in China, in stock - 000 rubles);
- Bitmain Antminer L3 + with power supply - 145 rubles (in China, in stock - 000 rubles);
- Whatsminer M3 with power supply - 125 rubles (in China - 000 rubles).
Bitcoin An interesting way was found by the Chinese farm holders: seeing high agiotage and volume of orders, they began to upgrade local mining pools running on Bitmain Antminer S9: current devices were sold, and the place was reserved for the new miner Bitmain Antminer S11, which had not yet gone on sale. Bitmain Antminer S9 used batches were shipped to Russia. The devices have been pre-tested, carried out maintenance work, cleaning and packaged as new.
It is also worth noting that the Chinese side of processing equipment orders has a certain chain of suppliers, dealers and the manufacturer itself. All of them are very closely watching the rush and the BTC / USD rate, changing the prices at lightning speed even in the process of making a deal.
The world of miners expected an unpleasant surprise, the new Bitmain Antminer S11 is significantly more powerful than Bitmain Antminer S9 (according to expert estimates, an increase in power by 30% is expected). During their installation in the large Chinese pools, there was an increase in the complexity of mining, which led to a drop in the yield of existing farms. Given the depreciation of the BTC / USD in 2018, the cumulative decrease in profitability in the new year was fivefold compared to December 2017.
Dash. An even more dramatic story happened with the Dash cryptocurrency mining devices, which appeared in September 2017. At the time of May 2017, the Dash cryptocurrency was very stable and was mined only on video cards, the miners consistently earned about $ 1000-1500 per month on one farm. The excitement began with the announcement by iBeLink in June 2017 of a new ASIC miner for Dash - DM11G, its computational abilities predicted monthly profitability in the region of $ 5000-10 per device, and it was the only ASIC miner for Dash cryptocurrency.
IBeLink opened pre-orders for this device for a short time in July with a shipping date in September 2017. The excitement contributed to the rapid buyout of all quotas for the production of DM11G, and the retail market for ASIC miners in Russia was flooded with offers to sell the DM11G at prices of 1 million rubles per device with delivery in September. But in mid-August 2017, when retail stores were already awaiting their orders for iBeLink DM11G, the Bitmain Antminer D3 device appears on the site of the BitMain manufacturing plant with a delivery date for November 2017, which also mines Dash cryptocurrency, while about 70% faster ... Later, the DR-100 device also appeared, which made the iBeLink DM11G unattractive, and retailers faced serious overstocking of this weakest of the Dash cryptocurrency mining devices.
Retail buyers who have not paid in advance have postponed the issue of acquisition until the situation has stabilized. And those who paid for their orders instantly connected new devices to the network, noting the high efficiency and monthly income in the $ 6000 area. But the number of new devices in the network has caused a sharp increase in the complexity of computations, while the increase in the rate of Dash against the dollar has not occurred. The payback period of one device increased from three to four months to one year, and retail prices for ASIC miners by Dash went down. Many retailers were forced to close, as they could not fulfill the conditions for investors financing orders for consignments of devices for a specific profit in a short time. As a result of all the events - phased announcement of Dash ASIC miners, a sharp increase in network complexity and a fixed Dash / USD rate - the decline in Dash mining profitability was almost three times as compared to the beginning of September 2017.
Mining still in trend
Nevertheless, the demand for the purchase of mining equipment still persists. Now Bitmain Antminer S9 and iBeLink DM11G bring customers daily income of $ 9-11 and $ 3-5, respectively. Of course, those who bought S9 at 350 rubles and more expensive than now, iBeLink DM000G, calculated on profitability of $ 11 and $ 120 per day, faced significant lost profits and a sharp lengthening of the payback period. But there is still a demand for miners, and many players also resort to the services of traders or try to play on exchanges themselves in an attempt to increase income. As a result, this leads to the expansion of professional participants in the crypto community.