Cryptocurrency mining for 2020. Profitability, forecasts, prospects of bitcoin mining

The era of home mining is becoming a relic of the past, but after Ethereum’s transition to the PoS algorithm became possible, there is a possibility of a return to home mining of cryptocurrencies such as bitcoin in 2020. The nuance is that the question remains relevant – is there a possibility to raise profits on this? Getting a high profit for mining bitcoin will be a difficult task, because the amount received for decrypting any block in the Bitcoin network will be reduced by half – so the benefit of mining can be obtained in the long term only with the condition of bitcoin rate of 16000 dollars, but at the moment such a rise in price is unlikely. But despite all the difficulties, the market still exists, has development and brings solid earnings. DeCenter has found a solution, which equipment for mining different coins is best suited, and which can be profitable in 2020.

What changes in the mining market occurred in 2019  

A difficult period for miners was 2018. Chinese authorities made bitcoin mining an illegal activity in the country, and also the entire industry in South Korea was banned. The largest bitcoin mining equipment manufacturers – Nvida, AMD, Genesis, Bitman – reported a significant drop in demand for equipment from miners and lower profits. This led to the loss of some pools and the closure of companies.

2019 was a favorable year for mining: the market of bitcoin cryptocurrency increased, this was influenced by the emergence of a new generation of equipment with high energy efficiency. The bitcoin mining market remained alive and continued its growth until 2020. Among the limitations, experts emphasize high transaction costs, resulting in low profitability.

Bitmain is struggling to stay in the leadership position. Among the cryptocurrency mining industry, bitmain is the largest bitcoin mining company. But even it has fallen on hard times during mid-2019, to the point of risking bankruptcy by drowning in debt. As measures, they had to reduce their computing power by, almost, 10 times from 2072 PH/s to 237.29 PH/s over a period of one month. The situation reached the point of corporate conflict between the founders. Meanwhile, the sales of their main bitcoin mining rivals went up, and the leadership of bitmain’s main pools (Antpool Bitmain and BTC.com) was taken over by competitors such as F2Pool and Poolin.

But it’s not easy to derail one of the leading cryptocurrency mining companies. Bitmain did their best to take control of the situation: at the moment 2020 Bitmain hashrate is 930 PH/s – which is 1% of the total computing power of the network. Also, in the fall, the company filed for an IPO in the States, and built one of the largest bitcoin mining centers in Texas. It was also published about the release of more powerful models of Bitmain devices that will increase the efficiency of cryptocurrency mining – such as ASIC S17-series miners. Going through a phase of change, Bitmain has revised its core marketing strategy just in December 2019. What exactly is it about? The fact that the company has taken a share of the risks of the owners of miners: i.e. it became possible to buy equipment and rent on credit. It also became possible to buy put options (March 2020 VTS sale contracts with a price of $5000) for large customers. Customers will be able to sell the cryptocurrency at the price they previously agreed to – even if its value declines, which would have made bitcoin mining unprofitable. By doing so, Bitmain disposes investors to have more confidence, reducing their fears, to the fickleness of bitcoin.

As has already become clear to everyone, next May – after the halving, Bitmain is betting on the growth of the cryptocurrency, than trying to recover its share of profits in the market of miners. Now the value of bitcoin in 2020 will determine the success of the company. The rivalry between manufacturing companies is heating up. It remains to be seen whether Bitmain’s new strategy will bring success. But we can say with certainty that it is a reflection of the competition between the manufacturers of miners, shortly before the bitcoin halving. The contenders for the top spot in cryptocurrency mining are companies like Huh8, Canaan and Bitfury competing against each other. Also announced is a new product in the mining device market, the M30 miner, from Chinese company MicroBT. They also released another line of products with high efficiency in cryptocurrency mining. Meanwhile, Canaan raised $90 million in an IPO on NASDAQ.

Cryptocurrency mining in China is finally allowed. CoinShare states that the bitcoin hashrate in China is 65%, which is the highest it has ever been. The country’s profit figure in terms of bitcoin network sophistication has been going up for a year. The National Commission in charge of reform and development in the country (NDRC) announced the authorities’ plans to ban mining, it happened in April 2019. But already in October, Xi Jinping (representative of the People’s Republic of China) calls on miners to combine efforts on the development of blockchain, and in November, mining was finally officially excluded from the industries that are on the list of banned – by the National Development and Reform Commission (NDRC). Considering the fact that the world’s largest global manufacturers in the cryptocurrency mining industry – such as Bitmain, Canaan, and Ebang – have left the bosom of China – the change in policy direction is a good sign for the cryptocurrency mining industry as a whole.

Change in the geography of cryptocurrency mining leaders. Most likely, China’s leadership in bitcoin hashing speed will not last long. A new generation of hardware is entering the market that builds a path for mining companies in other countries, and reduces China’s advantage in cheap electricity. German and American mining companies Nothern Bitcoin and Whinstone have signed a deal to build the largest mining farm in the entire world. The opening of powerful mining farms also took place in South America, Canada and Northern Europe.

Technology race. A competitive technology race awaits the mining market in the near future. Companies are looking for ways to increase hashing speed, while minimizing power consumption, which they are now actively investing in. As more new products are launched, the market is predicted to grow. Technacio made a calculation that the global cryptocurrency mining device market will grow at a CAGR of around $2.7 billion from 2019 to 2023 and will show an overall compound annual growth rate of around 23% by 2023. Still, based on their report, the major market push for the mining industry is the growing demand for narrowly focused hardware, optionally FPGAs (FPGAs), which have the function of being programmable by the user themselves, and ASICs, as they utilize hard logic chipsets that are specifically designed for the purpose of decrypting hashes. The influence of bitcoin mining pools will increase. Smartphone apps for mining cryptocurrencies such as Litecoin and Dash, which do not require high computing power, will also play a role.

Total income of miner owners for 2019

In 2019, CoinShare provided data according to which bitcoin mining brought in $5.8 billion, which is less than the previous year’s profit by $0.4 billion, but exceeds the progress of the year before by $2.1 billion.

The benefit of mining almost disappeared back in 2018, as a weighty portion of profits were spent on costs, and for smaller pools, the mining process could even generate a loss. Starting from March 2019 and up to the summer, due to the fact that the market grew, miners began to feel much better. But November 2019 showed disappointing results, due to the fact that the price of bitcoin fell. Mining owners simply unplugged their devices, as they did not want to work at a loss to themselves. Maintaining farms, paying for electricity and reselling cryptocurrency became completely unprofitable as costs exceeded revenue. The approaching halving made the situation even more heated, with no guarantee that the rate would rise, with the bitcoin price dropping twice. Only a few people could afford to mine cryptocurrency for the future.

Profit from mining today in Ukraine.

Knowing the hash rate today, you can calculate the global average breakeven point of cryptocurrency mining, which is around $8000. Take a lower bitcoin price and mining loses its profitability. The fairness of this situation applies to small owners of miners, but industrial mining of cryptocurrency by mining farms can only be done at a loss to themselves.

Breakeven point of Ukraine – fluctuates close to the level of $2000, taking into account the electricity price of 1.68 UAH on average. Calculations have shown that the monthly profit from bitcoin mining by different Asic devices ranges from 2843 UAH to 10148 UAH, at the current dollar exchange rate of 26.74 UAH. If you calculate the net profit per month, minus electricity costs, then: Antminer t17 brings about 2843 UAH/month, Whatsminer m21S – 3138 UAH/month Antminer s17 PRO – 4036 UAH/month, and Antminer s19 PRO – 10148 UAH/month, with an average electricity price of 1.68 UAH

Is it relevant to upgrade equipment in 2020?

Today outdated equipment still has a place, but the realities of 2020 show that in the near future it will lose relevance. Experienced miners recommend using a device with a hash rate of 75 th/s or more. New devices with good performance will not lose out in profitability, and even if the equipment sags in efficiency from time to time, the recalculation of complexity will bring the profitability of these devices back on track. According to these criteria – one of the most advanced devices Asic for 2020 – Antminer s19 Pro with a hash rate of 110 th, while consuming 3250W of electricity, which is quite payable in the realities of today’s electricity prices.

In case your miner does not meet these characteristics, and there is no possibility to hold, you have the option to switch to newer and more energy efficient devices, or it makes sense to think about disconnecting outdated equipment. Mining on older devices now makes no sense at all, as the profits won’t recoup the costs. There is no need to be afraid of global sales of mining equipment – half of the owners of miners have not yet compensated for the old, and novice users are already aware of the lack of freebies.

Professionalization of the mining market

The era of mining at home has come to an end. At the moment, to earn money this way, you need to have a large stock of technical knowledge and a financial reserve in case of a drop in the cryptocurrency rate. People who are engaged in mining, without low electricity prices – will have to leave the market, as stronger miners will easily push them out of there, and large payments will be almost impossible to get. But those who want to stay in this field for a longer period of time – may smile luck in the form of stable income with the growth of the cryptocurrency market.

Remember that cryptocurrency mining is an early investment that can pay off not earlier than 2-3 years. But if you do decide to enter this business, then you must sensibly assess all the risks and be ready for losses.