Is Crypto Mining Still Profitable?
*Newly launched DeFi Academy is here! Feel free to visit the site to take advantage of the free, no sign-up required, crypto learning portal.
Table of Contents
- Mining Explained
- Bitcoin Mining Profitability
- Equipment, Energy, and Coins
- Crypto Profitability Chart
- Concluding Thoughts
- Crypto Mining FAQs
Have you ever wondered if you could make passive income mining cryptocurrency from your computer?
With dozens of intriguing options on the market, we set out to determine if crypto mining can be profitable for an individual trader at home without having to buy any expensive hardware or join various mining groups.
Mining cryptocurrency is a serious time and financial commitment that should not be taken lightly. When making financial decisions around crypto mining, we always recommend speaking with a licensed financial advisor to see if mining cryptocurrency makes sense in your situation.
What is crypto mining? Mining is when distributed nodes on a given blockchain confirm transactions sent through the network by other users. In order to accurately verify the transactions, each node must run a copy of the blockchain. Mining computers then use software to verify all the transactions are accurate and legitimate per the requirements of the blockchain.
This distributed approach to network validation makes it possible for a cryptocurrency such as Bitcoin to operate without a centralized company or group controlling the network.
An epic example of a mining facility, taking large amounts of capital to construct:
Bitcoin Mining Profitability
The start-up costs for mining BTC are significantly higher than the other currencies we’ll be covering. In June 2022, the average cost of mining a single BTC was around $22,000 in North America (Source).
At times, the energy and hardware costs of mining a bitcoin can be more expensive than the rewards paid out, varying largely on geographic location. A Bitmain Antminer costs $3,595.00 to purchase new.
In our calculations, we would net a $1.95 USD loss per month mining BTC with a home PC or laptop. The remainder of this article will focus on the profitability of mining other cryptocurrencies at home with typical home computers.
Equipment, Energy, and Coins
For energy costs, we are using the Pennsylvania average of $9.70 cents/kWH hour, which we pulled from the US Energy and Information Agency. Electricity costs vary greatly by state and country.
Monero – Monero is a 1st generation, Layer 1 cryptocurrency that emphasizes privacy and anonymous transactions. Unlike most cryptocurrencies, there are no public records of wallet addresses, transaction amounts, or transaction dates, making the platform fully anonymous.
For this, we give Monero an A+ for having a strong use case and gives us a reason to believe traders will be using Monero for the foreseeable future as the security benefits are a huge draw.
RavenCoin - RavenCoin is a Bitcoin Fork that was built by early adopters and developers of the Bitcoin Protocol. RavenCoin has a shorter block time, and it differs in mining rewards from Bitcoin.
There is no founder or team coins set aside, making the project feel decentralized at first glance. We give RavenCoin a C as it does not offer users any new features or utilities that Bitcoin does not.
Ethereum Classic - Ethereum Classic is a hard fork of Ethereum founded in 2016. It still runs on a Proof of Work consensus model, unlike Ethereum. ETC is a smart contract-compatible blockchain, meaning developers can build dApps and DeFi products in the ETC ecosystem. We give ETC a B+ as it provides utility in the form of Smart Contracts unlike any of the other coins on this list.
Bitcoin Gold – Bitcoin Gold is a hard fork of Bitcoin that is mined on common GPUs instead of ASICs. GPU Mining makes it easier for individual traders to mine Bitcoin Gold. The Bitcoin Gold team is actively building new wallets and products to help Bitcoin Gold users and developers interact with other currencies.
We give BTC Gold a B+ for having more accessible mining than BTC, however, similar to RavenCoin, BTC Gold does not offer users any new utility which will hurt its long-term growth.
Dogecoin - Perhaps the first and most famous meme coin, DOGE, took the internet by storm in 2021. Dogecoin offers lower fees and faster transaction speeds than Bitcoin. It has a strong and devoted community, which is more active than most, if not all of the other coins on this list.
Outside of it’s meme appeal, Dogecoin does not offer much utility. We give Dogecoin a C as it has a stronger community than most projects on this list. However, we don’t anticipate much further growth of the Dogecoin ecosystem.
Z Cash - ZCash, similar to Monero, offers its users more privacy than Bitcoin or Ethereum. It has a block time of 75 seconds. Similar to Bitcoin, the sender, receiver and amount can be seen on the blockchain.
However, ZCash utilizes shielded transactions to make it more difficult to link transactions, which offers users more privacy than BTC. We give ZCash a C for its innovations towards payment privacy.
Crypto Profitability Chart
Figures are drawn using CoinWarz
In today's experiment, we would lose money trying to mine any of the cryptocurrencies mentioned above. Crypto mining requires substantial technical knowledge of blockchain technology, as well as a financial investment in purchasing the hardware and data storage necessary to mine cryptocurrencies.
While crypto mining can be profitable at times, costs can often make it unprofitable. In 2022, mining Bitcoin has become unprofitable for many. Keep in mind, these are the most elite bitcoin mining factories that are having a hard time turning a profit, let alone an individual miner.
Crypto trading, on the other hand, is quite different from mining and is a great way to gain traction, helping to build a diverse portfolio of assets. In fact, Stoic AI is one of the best solutions for those looking for ways to grow and expand their options beyond traditional mining.
Most mineable coins are not smart contract compatible. While some people may be making money mining them, this technology is outdated and their best days are far behind them. We do not endorse any particular mining hardware or software and we strongly advise you consider the financial risks of mining cryptocurrency on your own.
Crypto Mining FAQs
Is crypto mining still profitable?
Crypto mining can be profitable when your hardware and energy costs are less than your mining profits. Factors such as mining difficulty, geographic location, blockchain, and hardware costs can greatly vary in costs associated with crypto mining.
How can one know that profit is being made?
Energy costs + equipment costs + mining rewards = Profit/Loss
What could be an effective alternative to mining?
Staking Pools on coins like Ethereum, Solana, or Cardano, among many other smart contract compatible L1 Chains is an effective alternative to mining.
Is crypto mining worth it?
It purely depends on your financial situation and risk appetite, there are profits to be made in crypto mining. However, start-up costs vary greatly and can eat into your profits.
Thank you for tuning into today's episode on crypto mining.
And as always... Keep your fingers on the Pulse!
Who is Cindicator?
Cindicator is a world-wide team of individuals with expertise in math, data science, quant trading, and finances, working together with one collective mind. Founded in 2015, Cindicator builds predictive analytics by merging collective intelligence and machine learning models. Stoic AI is the company’s flagship product that offers automated trading strategies for cryptocurrency investors. Join us on Telegram or Twitter to stay in touch.
Information in the article does not, nor does it purport to, constitute any form of professional investment advice, recommendation, or independent analysis.