At what point does cryptomining become not profitable?

[WillOfTheLand]

I'm wondering how low coins like bitcoin and ethereum for example have to go before most miners would theoretically not be able to break even anymore. As this is the most likely point where we will see them start to jump ship and get out before they take losses.

[IkeaGnome]

It'll depend on cost of electricity. Cost of electricity is more than earnings from mining then it's not profitable. 

Electricity costs different amounts in different places so it might not be profitable in one country while staying profitable in another.

[AndreiArgeanu]

When the price to power and cool those cards is close to, equal or higher than the price of the amount of crypto they can mine.

[Moonzy]

11 minutes ago, WillOfTheLand said:

I'm wondering how low coins like bitcoin and ethereum for example have to go before most miners would theoretically not be able to break even anymore

in term of fiat, right now it's about 10-20% lower compared to when btc is at 55k-ish

during the drop, the profitability spiked to 200-300% (peak was 400%)

so u can roughly say crypto prices doesnt have much to do with profit directly, trading volume does (?)

 

the profit margin for 0.1$ per kWh is around 1000% ($10 of crypto from $1 of electric)

number for a typical 3080

 

so profitability have to drop by about 80% ($2 of crypto from $1 of electric) before people think it's not worth it, i guess?

 

some people continue mining even when it's break even (1:1), to hodl on the coins for peaks in crypto pricing

ie, my GPU may be doing $1 a day in late 2018, but if i hodl onto it until 2021, it's actually $15 a day back then, if that makes sense

[minibois]

-- Moved to Folding@home, Boinc, and Coin Mining --

[mariushm]

There is a difficulty factor in the algorithm that's adjusted all the time automatically, to make coin generation take at least some amount of time (ex one block added to the chain every 5 minutes, and each block rewards miner with some amount of coin ..ex 2-3 ethereum + a transaction fee from every transaction stored in the block ) 

If a bunch more people add mining power, then the difficulty is increased, if less people mine the difficulty will decrease.

 

As long as it's profitable to mine a coin people and companies will add hardware to mine, which will increase difficulty and that will make mining harder, which means you need more powerful mining hardware to stay competitive.

 

That's what happened with RX 4xx and RX 5xx cards from AMD - they were good a few years ago, but so many people started mining when it was profitable, that the difficulty jumped up and made the cards work more for the same amount of coin.  Also, the algorithm finally crossed the threshold of around 3.8 GB of data, so 4 GB cards can no longer hold all the data required to mine in VRAM so they'd be very slow at mining, having to constantly retrieve data from RAM instead of VRAM ... 

 

If people stop mining because it's too difficult, you're still gonna have people that mine simply because it's free electricity, and the hardware is bought, so for them it's profit. 

 

There's also companies or groups of people that practically bought or made hydro plants that generate excess power and they use this excess power for mining and to recover their initial investment - picture for example a small village somewhere with a hundred families or so, and a few people got together and installed a small hydro plant ... those 100 families won't consume that much power, so the excess can be used to mine and pay the loans for the power generators.

 

Coins like Ethereum are also working on methods of validating the blockchain that don't involve mining - instead you use a client software to validate transactions and you're rewarded with a small transaction fee.. they're hoping for something like 8-12% profit if you're participating as a validator (you have to stake some coins you own and if you're a good validator and do the job, at the end of a year or after some time passes, you get some rewards, like dividends... if you're attacking the network or otherwise try to cheat the system and let bad transactions go through, you get fined and potentially lose the coins you staked) 

[airborne spoon]

I have 100% free power and all my equipment is paid off, I hit my ROI about a year or two ago and cashed out some coin to fiat so it is a real ROI since i got the cash in hand from it. So i will keep mining as long as my equipment keeps running. Most of my mining profits i just hold, or if i need some cash for something like car repairs or upgrades i just cash out a little.

My ASIC's do put out a lot of heat and even though I have them sitting in a door jam exhausting directly outside my garage still gets super hot and when it hits 110f 2 of them will stop working from overheating errors so I lose about 5 hours a day in the middle of summer. But its fine as power is free its all profits anyway.

For most people it is a line they have to juggle between the profit they can make and the money they spend on power and cooling and staff if its a large farm. Back when i started mining BTC i was making 0.02BTC a day with only 3x S9's now i have 3 S9 and 3 S15 and i get 0.01BTC every 2 weeks. As the difficulty goes up the profits die down and the expenses stay the same.