Crypto mining is the process by which new cryptocurrency is brought into existence, according to finance experts like Dan Schatt and others. Early on, anybody could become a miner with a desktop PC, and it was enough to generate coins at a somewhat predictable rate. Then miners discovered that graphics cards used by gamers were more efficient at the type of repetitive calculations required to mine bitcoins or other cryptocurrencies.
As time went on, dedicated mining equipment was developed. These chips, known as Application-Specific Integrated Circuit (ASICs), are now the only way to profitably mine bitcoins and other cryptocurrencies.
Crypto mining was lucrative at first, but circumstances have arisen that mean it is no longer worth the effort for most people.
The Cost of Mining Equipment Has Increased Dramatically
in 2017, an Antminer S9 cost around $1275. By January 2019, this had risen to over $2400. The difficulty of mining has risen exponentially since then, meaning that it takes more and more energy to generate coins.
The Price of Bitcoin and Other Cryptocurrencies Has Declined
Bitcoin was worth around $19,000 in December 2017. As of January 2021, it was valued at around $3,500 – a decline of over 80%. The value of other cryptocurrencies has also fallen. This makes it much more difficult for miners to break even, never mind making a profit.
The Global Energy Market Is in Flux, With Prices for Electricity Surging in Some Regions
According to reports, electricity costs in Iceland and Venezuela are among the highest globally. So if it is not profitable enough to mine bitcoin and other cryptocurrencies where most of the mining takes place, it stands to reason that it is not profitable enough everywhere.
Mining Competitors Have Increased
Every day, more and more people try their hand at crypto mining. In addition, organizations such as the Chinese government are also getting in on the act. This means there is a lot of competition for new coins and tokens, which drives down the price. In some cases, this has driven the price to zero.
There Is a Finite Amount of Cryptocurrency to Be Mined
According to reports, around 80% of all bitcoins have already been mined. This means that, unless something changes, there will never be more than 20% left for everyone else or future generations. At current rates, the last bitcoin will be mined in 2140. This makes crypto mining a race against time, as the sooner you start, the more coins you can potentially generate.
There are Too Many Miners
According to a report, there are more than 1 million active miners on the planet. This represented a massive rise from just a few years ago when it was more likely that only hobbyists would give crypto mining a go. It is very unlikely that all of these people could ever make a profit, no matter how much more efficient their equipment becomes.
In conclusion, crypto mining is no longer a viable option for most people. The cost of mining equipment has increased dramatically, while bitcoin and other cryptocurrencies have fallen. In addition, the global energy market is in flux, with prices for electricity surging in some regions. As a result, mining competitors have increased, while there is a finite amount of cryptocurrency to be mined. This has led to much speculation about the future of bitcoin and other cryptocurrencies.