"The best time to expand." How miners are surviving the crypto winter
The commercial director of Intelion Data Systems spoke about the prospects of buying cryptocurrency mining devices and the cost of mining in a bear market
The cost of mining devices has fallen 6-7 times in the last year. Producers are forced to sell equipment below production cost - this has happened only twice in the history of cryptocurrencies. However, each time after such a drawdown, the "asics" become more expensive again.
Such circumstances create extremely favorable conditions for buying cryptocurrency mining equipment while its price is so low. By buying equipment at a low rate, you get an opportunity to resell it at a profit when the market goes up again because the price of the equipment correlates with the rate of the cryptocurrency it mines.
However, the low market of 2023 not only has advantages in the low cost of equipment but also in the cost of coin mining. This year could be the most profitable year in terms of the cost of mining, as evidenced by the financial model developed by Intelion Data Systems.
In the run-up to one of the most important events in the digital currency market - bitcoin halving - the opportunity to mine as many coins as possible at a low cost should be the main strategy for the near future.
Halving is an extremely positive phenomenon. Halving reduces the pressure that miners exert on the bitcoin price by selling bitcoin stocks. In theory, as long as demand continues, this is what causes the coin's price to rise. The previous reduction in the reward for a mined block, which occurred in May 2020, was one of the reasons BTC rose to an all-time high of $69,000 in 2021. And after the first two halvings, in 2012 and 2016, the bitcoin price showed a rise of more than 1000%.
The next bitcoin halving is just over a year away. This means that in addition to halving the coin's production volumes, a 30-40 percent increase in the complexity of the network is expected. Contrary to the prolonged stagnation of the market and low yields, new miners are constantly joining the network.
Before the last halving, there was a significant jump in the energy efficiency of the devices. The 14-nanometer chips became inefficient, so miners were forced to move to the next level of equipment containing 7-nanometer chips.
However, now there are such devices (for example, WhatsMiner M50 118 Th/s), which run on 5-nanometer chips. And a possible future jump as a result of halving will mean a transition to a 4-nanometer chip (an increase of 20% vs. 100% after the previous reduction in the reward for the mined block).
Taking these factors into account, it turns out that the current capacity will be 80% less efficient a year from now. Simply put, to mine the same amount of bitcoins you will need to buy 80% more equipment and spend 80% more electricity.
This is confirmed by the calculations we have made when building a financial model for investing in BTC mining. If ten WhatsMiner M50 ASIC miners with 118 Th/s processing power, which is the most popular device compared to its price, power and energy efficiency, it turns out that they can mine 1.37 BTC in 2023, while the next three years: 2024, 2025 and 2026 - only 1.39 BTC in total.
Mining on 10 devices WhatsMiner M50 118 Th/s
An important point of this strategy is also not to use the mined cryptocurrency to cover the costs of electricity and hosting. We recommend saving up the mined BTC asset and selling it when the rate rises, significantly increasing your profit and reducing the payback period of your initial investment. That said, when the market is in an uptrend, let us remind you, the cost of equipment increases manifold.
But that's not the whole benefit. For example, Intelion Data Systems offers a 12% discount when paying for power one year in advance. In addition, the calculation of payback devices and the potential profit for the client is carried out by personal financial models developed in the company.
To summarize, the crypto market is cyclical. A collapse is the best time to expand your business. That's why it can be a profitable time to buy equipment. The most correct strategy may be to buy devices and mine the most bitcoins without selling them. As a result, when the market turns to growth, the value of the mined cryptocurrency will increase manifold. It is important to cooperate with trusted counterparties and to approach mining investments with a cool head. This is the main rule, which is typical not only for the sphere of digital currency mining but for the entire blockchain industry.
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