Is Mining Crypto Not Profitable Anymore?

A decade ago, mining Bitcoin(BTC) was easier. The required computation power was way less than it is right now. As time passed by, more and more Bitcoins were mined which were halved every time a block was unlocked. The hash rates have decreased significantly and mining has become an expensive process. The cost to mining in two fold. The first one being that a miner has to invest in high speed mining rigs which are capable of performing computations swiftly. The second, these mining rigs need to be powered up using a ginormous amount of energy which also has a high cost. In a bullish market, a miner would consider going through the trouble of bearing these expenses, however, considering the conditions of today’s market, which is voraciously bearish, it comes as no surprise that miners are turning their backs on the activity.

Recently, Nvidia, the provider of hardware tools for gaming and high tech computing, announced in a press release that they had failed to generate revenues that had been previously forecasted in the gaming and data center platforms. Last year, the GPU miners were less and less in demand because of the bear run. The value of cryptocurrencies that are not pre-mined, declined, and miners became lesser eager to participate in the mining procedure. Due to this, prices of the hardware also decreased. As for Nvidia, they remain hopeful that focusing on their older products, graphic cards and Artificial intelligent systems, the company will continue thriving. According to the statement mentioned in the press release, Q4 revenue is expected to be at $2.20 billion, opposed to the previous projection of $2.70 billion. Owing to these developments, Jensen Huang, founder and CEO of NVIDIA, whilst remaining hopeful about the time to come, told:

Q4 was an extraordinary, unusually turbulent, and disappointing quarter. Looking forward, we are confident in our strategies and growth drivers.

GPU’s were all the rage, when the value of Bitcoin was touching the skies, highest being close to $20,000 at the end of 2017. However things took a dark turn, when the market turned bearish and consequently a reduction of numbers was witnessed in sales. The introduction of newer ASIC mining chips, which boast higher speed, into the crypto space also decreased the demand for the GPU processors.

The Company maybe suffering from loss of revenue owing to the crypto market, but this is not the only demand of the world of computing Nvidia is catering to. The opportunities in the market of Artificial Intelligence and high performance computing are also on the rise, and the hardware company still seems to be in the competition. Huang further mentioned:

The foundation of our business is strong and more evident than ever – the accelerated computing model NVIDIA pioneered is the best path forward to serve the world’s insatiable computing needs.  The markets we are creating – gaming, design, HPC, AI and autonomous vehicles – are important, growing and will be very large. We have excellent strategic positions in all of them.

In the long run, it seems that mining crypto, specifically Bitcoin, can be a quite costly activity. The amount of energy alone attributed to Bitcoin mining is mind boggling. The energy being harnessed to power mining rigs, if sourced from non renewable resources has other negative implications as well. So on top of everything else, mining crypto costs us the well being of our environment.

As we move forward, it is important to presume that mining Bitcoin or any other crypto whose value is deep in the ditches for now, is not going to be profitable for the mining pools or individuals. Certainly not if they plan on selling it in the bearish market. However if the market does recover in the time to come, the miners can actually hope to make a profit.

Habibah Shahid

A Computer Science student but a writer at heart. Habibah writes about Cryptocurrencies and the underlying technology, Blockchain, with the perspective of a Computer Scientist. Email: Contact the editor at editor.news@blockpublisher.com

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.