Mining relevance in 2021: payback periods, equipment selection

The first half of last year was not the best time for miners. Digital coins were cheap, and yet another halving began on the Bitcoin network, and in fact, the income from mining barely covered the costs.

The profitability of the equipment was very low, while a lot of new ASICS models appeared, which began to gradually replace GPU miners from the Ethash algorithm.

But, mining veterans were sure that these were all temporary difficulties and a new rise in prices for cryptocurrencies was inevitable, which happened, like three years ago in winter. Already on December 1, 2020, Ethereum broke through the $ 600 mark for 1 ETH. At the beginning of February, Ether was already worth $ 1,300, and on 05/12/2021 a new absolute maximum was set at $ 4,356.99 per ETH coin. Roughly the same scenario was followed by an increase in the price of the first cryptocurrency Bitcoin. The patriarch of the blockchain industry at its peak reached $ 64,804.72, other crypto coins have risen in price and become more profitable.

And even the November 2020 hacker attack on the Ethereum Classic network turned out to be a benefit for miners. To eliminate its consequences and prevent a repetition of the attack, the developers were forced to carry out a hard fork, after which the ETC coin became available for mining even on hopelessly outdated video memory cards. GPU miners managed to extend the operation of four-gigabyte cards for Ether mining, and RVN mining also brings good income.

There are also two new profitable algorithms  Autolykos  and  Octopus. Video card manufacturers Nvidia, as if wishing to rehabilitate themselves after the release of the failed RTX 20 series, released a new one. The miners liked the RTX 3060/3080 graphics adapters so much that they even began to put a hashrate limiter on the last batches, so that at least some of the video adapters would reach gamers. However, according to the latest data from thematic forums, miners have already managed to solve this problem.

AMD has also released a number of promising new products. Based on all this information, we can conclude that mining is still profitable. Especially if electricity prices in your area are not very high (or you personally have access to a free outlet). Let’s try to analyze what will happen next and whether it makes sense to invest in mining from scratch in 2021.

Cryptocurrency mining prospects

Predicting the future of cryptocurrencies is a thankless task, somewhat reminiscent of fortune-telling on coffee grounds, but, nevertheless, there are certain indicators that you can rely on when studying the issue of mining prospects.

Cryptocurrency mining

Analysis of the future of mining

When analyzing the possible future of mining, it is necessary to take into account the following factors:

  • The growing difficulty of mining the most profitable cryptocurrencies;
  • Are there any prospects for increasing the capitalization and value of the main cryptocurrencies produced by mining;
  • Plans of leading manufacturers of mining equipment for the production of new miners and for which coins;
  • Legislative perspectives regarding the cryptocurrency sphere, which can both facilitate mining and complicate the opportunities to engage in this activity;
  • Suppliers’ plans to increase the cost of electricity, or to provide discounts to miners, as persons engaged in production activities. Due to the relatively low cost of electricity in most post-Soviet countries (including Russia, Ukraine and Belarus), the prospects for mining do not look so bad;
  • At what real price it will be possible to sell the equipment in the future in the event of an even stronger drop in profitability;
  • What plans do the developers of the main cryptocurrency platforms have for their further development, will there be a transition to other algorithms for the functioning of the blockchain and how this will affect the profitability of miners;
  • The general state of the global financial system, which significantly affects cryptocurrencies.

All these factors affect the payback time of the equipment and the overall profitability of the mining business. Let’s try to figure out in more detail whether it’s worth investing in cryptocurrency mining now.

Potential problems for the coming year

In the near future, many popular cryptocurrency platforms are expected to be updated, as well as important decisions affecting the general state of the cryptocurrency market.

Mining cryptocurrencies

The upcoming Ethereum 2.0 update will definitely reduce mining profitability. Making a positive decision on Bitcoin ETFs can significantly improve the health of the cryptocurrency market and, thereby, increase the profitability of mining.

The bitcoin rate, which fell significantly in 2018, is largely the same as the situation. After the spring upsurge, a correction has come, and it’s hard to say how deep and long it will be. Some have already started talking about a new cryptozyme, but it is too early to draw such conclusions.

In addition, the ten-year history of the blockchain industry shows that, after another surge, prices do not roll back to old lows. It is difficult to predict when the next rise will come, but it is possible. If it comes again, the cryptocurrency mining business is likely to become even more lucrative.

Should you start mining in 2021, how not to lose money?

The decision on whether to start mining this year needs to be made, taking into account the factors affecting the cryptocurrency market and the available financial opportunities. Given the unpredictability of the exchange rate in the long term, it is  not worth taking loans for such a business .

ASIC miners from Bitmain

The most reasonable decision to invest in mining would be to allocate an amount that is not so important in the short term and to carry out mining for the long term or for trading on exchanges.

Mining 2021 – the essence of the process and prospects

In 2021, the most profitable cryptocurrencies to mine according to Whattomine (if we take into account the seven-day mining period) are:

  • For AMD cards : Ether (for cards with 6 GB and higher memory until it switches to PoS), ETC, Ravencoin, Ergo, Beam;
  • For  Nvidia  cards : Ether (for cards with 6GB and higher memory, until it switches to PoS), Ergo, Conflux, MTP, Equilibria, BitTubeCash and other forks of CryptoNight, MimbleWimble, and Equihash.

All these coins give a profit of about 100%, so it cannot be said that mining is now unprofitable. Most of these coins are constantly present in the top cryptocurrencies used for mining, so you can plan that such a business will consistently generate income.

Business development plan, what you need to know when investing money

When calculating a business plan for the development of a mining business, it is worth taking into account the factors indicated above, it will approximately be determined which cryptocurrencies will be the main ones for mining and to understand in more detail their prospects, including the complexity of mining.

Cryptocurrency mining in 2021

Few technical details

When mining any cryptocurrency that is mined using a proof of work (PoW) algorithm, the complexity of mining must be taken into account.

This indicator is associated with a growing increase in network power and algorithms for the functioning of blockchains of different cryptocurrencies, in which the block generation time should be performed in approximately the same time interval.

Mining difficulty

When the profitability of any coin increases, many miners «jump» to it, hoping to get a large profit. Often they do not win anything at the same time due to the fact that while they mine enough coins for exchange, their rate will drop.

You can insure against this when using the Nicehash program, but at the same time you need to be ready to pay a commission and use not the most optimal video card settings to achieve compatibility with most mining algorithms.

As a rule, in the long term, miners receive less income from mining popular coins due to the increasing complexity of the network. This factor must be taken into account when calculating the profit from a mining farm for the long term. There are many resources on the Internet that allow you to study the difficulty graph for each specific cryptocurrency, and roughly understand how much profitability will decrease.

Let’s try to develop a mining business plan with calculating the cost of the farm and taking into account its payback.

Minimum investment in mining

The amount of the minimum investment in a mining business is related to the following factors:

  • The cost of a mining farm, which can consist of one rig for 6 cards of the GTX 1660 Super or RX 5600 XT level  , or, on a large scale, will be approximately a multiple of the cost of one rig with such video cards or other components;
  • The cost of rent and security, which is different in each case, for example, for mining a hotel, you need to plan a periodic payment, and in the case of home use, the rent is zero;
  • The cost of electricity per month, which is desirable to take into account when starting a mining business, because it is better to exchange cryptocurrencies for money without haste;
  • The cost of paying for Internet access.

If serious investments are planned in the mining business, then it is worth considering the possibility of using mining hotels that provide security and maintenance of equipment, which justifies the payment for their services, as well as think over a business mining plan in special containers.

When calculating a mining farm, you can take as a basis the cost of one rig, as a conventional unit used in mining.

A typical rig might be configured like this:

  •  MSI Z390-A Pro  motherboard – cost about  $ 125  ;
  • Processor per socket  1151  – about  $ 125  ;
  • 4 gigabytes of DDR 4 RAM  – about   $ 30
  • Power supply unit of  at least 1200 watts or two 700 watts each  with  Bronze certification   and above  –  from $ 100  ;
  • 6 video cards  GTX  1660  for 6 gigabytes or 6 video cards AMD  RX 5600 | 5700 XT  with  6/8 gigabytes of memory  with  six risers – from   $ 5500 and more;
  • Body / frame, cables, wires, surge suppressor – about   $ 50 .

The total cost of such a rig will be approximately $ 6,000. You can save somewhere, buy better equipment somewhere. but the order of prices for the new rig will be something like this.

Taking into account the existing profitability of mining Ethereum and other similar in profitability cryptocurrencies, according to Whattomine, the daily income for such a business will be about $ 8 with the cost of electricity at 6 American cents per kilowatt. Based on these data, the mining farm will pay off in about 25 months.

Whether it is a lot or a little, everyone decides for himself. When planning investments in cryptocurrency mining, you need to take into account the  fluctuations in their growth.  As of 06/26/2021 11:20 Moscow time, the ether rate on the Binance exchange is $ 1,727 per coin. After upgrading the network and improving the technical characteristics of the Ethereum platform, it can grow back to $ 4000/5000 and even more.

There are many factors that allow us to hope for the further growth of cryptocurrencies, which will make the payback period much shorter, but no one can know for sure.

The relevance of mining on Asiks in 2021

If you calculate a farm using ASIC equipment, then you need to take into account that the profitability of old ASICs is now very low, and new ones are likely to be profitable only in the next few months.

In this case, you need to take into account the time factor associated with the supply of new equipment, customs clearance, the cunning of Chinese sellers and more …

Given the significant volatility of the cryptocurrency market and its unpredictability, it is virtually impossible to calculate the prospects for mining and the profitability of ASICs in 2021. Everyone can independently calculate the profitability of buying ASICs, but, in any case, it is necessary to take into account the factor that they cannot be reprogrammed to other algorithms, which can be done with mining farms on video cards. In addition, a video card can always be sold at residual value, and few people need ASIC devices.

Based on this, the prospects for mining on video cards look more rosy. However, all PoW algorithms are taken under the control of industrial miners, and some blockchain projects (for example, the same Monero), protecting themselves from ASICs, switch to algorithms that are profitable only for mining on central processors.

On the other hand, there is more and more hype about the excessive consumption of electricity by Bitcoin miners. The Chinese authorities are already planning to ban the operation of crypto-mining data centers in one of the provinces, where electricity is produced mainly at coal-fired stations. And Elon Musk’s tweets about the «non-environmental friendliness» of bitcoin mining also contributed to the decline in the rate of the first cryptocurrency, and then the rest of the coins.

Thus, the answer to the question of what the future holds for Bitcoin mining, which is entirely based on ASIC devices, seems to be quite clear. The purchase of old ASICs for Bitcoin mining can be justified only by the presence of confidence in the prospects for the growth of cryptocurrencies and the ability to wait for this event for a long time.

The most important problem is not the bad impact of mining on the environment, but the upcoming transition of the financial systems of developed countries to the blockchain. The US and EU are closely watching China’s digital currency transition program, and are almost ready to launch similar projects. Governments of other countries are following their example. And now they are already beginning to perceive bitcoin and other crypto-coins of distributed networks as a direct threat to the state monopoly on the issue of money.

It has not yet come to direct bans, but the pressure is increasing. And in poor countries, for example, in El Salvador, Bitcoin is already ready to be recognized as an official means of payment. Some release state cryptocurrency, while others, having no money to develop it, are ready to use what they have.

Given the current situation in the cryptocurrency market, the prospects for mining for the coming years are currently rather vague. But, with a high degree of probability, it can be predicted that cryptocurrencies will continue their development and will increasingly penetrate into all spheres of human activity: the future calls and mines ….

This will inevitably lead to an increase in their popularity and financial attractiveness. Therefore, mining can be regarded as an investment in the future, in which cryptocurrencies, as one of the classics said, will be used not only by everyone …

Cloud mining is the best option for most investors

Cloud mining is a model for earning cryptocurrency by renting equipment (hash), mining is carried out due to equipment management by a contractor who solves all issues related to technical and software components.

Setting up cloud mining does not require a productive computer or knowledge of blockchain and cryptocurrencies in general. Setting up in this case consists in going through the standard registration procedure on the service website, choosing a tariff plan and paying for the contract. Then the user specifies the address (personal wallet) where the mined cryptocurrency will be withdrawn.

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