The fall in cryptocurrency rates this year had a direct impact on the mining industry. Income from cryptocurrency mining has been significantly reduced and many companies and private miners have been forced to turn off equipment and cut costs. At the same time, many cryptocurrency mining enterprises have found the “crypto winter” to be the right time to upgrade their fleet and continue to increase their capacity.
Geographical features and inexpensive electricity in Russia allow mining on favorable terms. The cold climate reduces the cost of cooling equipment, and a surplus of electricity in some regions makes it possible to keep many mining farms running, unlike in other countries where record heat and high energy prices lead to a halt in cryptocurrency mining.
The experts told RBC-Crypto about whether now is the right time to enter the mining industry in our country, and what investments will be required for this at the initial stage.
Long term investment
The cost of bitcoin has decreased by more than 3 times from its highs, says Sergey Arestov, co-founder of BitCluster. In his opinion, the course may go deeper, but “catching the bottom” is a thankless task. If an investor trusts cryptocurrencies and is ready for long-term investments, then the time to enter mining is right: now or never, the expert believes.
With the current cost of BTC, the complexity of the network and the cost of electricity 4 rubles. per kWh, modern equipment pays off within about three years, the specialist said. He noted that it is necessary to plan mining as a business under such conditions, although they may not seem very attractive to someone.
According to Arestov, this is less risky than building long-term financial models at highs, as it was a year ago, when, for example, one ASIC miner with a capacity of 100 Th/s brought in $1,000 per month. For comparison, now the net profit from the operation of such a miner is about $180.
Today, it is more profitable to enter mining than six months ago, prices have decreased by two to three times, Ivan Sharov, director of the online store for mining equipment and computer components Hardvar.ru, agreed with the previous expert. According to him, given the low prices for equipment and the payment of monthly expenses associated with mining from their own funds (electricity, site rental, maintenance), it is possible to compensate for the low rate of bitcoin. But if you withdraw the mined bitcoin on a monthly basis and pay expenses from these funds, then it will be difficult to recoup the equipment, the expert believes.
He noted that given the past years, mining has good prospects if the equipment is purchased at the current low price, and mining costs are paid from one’s own funds. Then, during the next cycle of rising prices for cryptocurrencies, it will be possible to make a good profit, Sharov explained.
An important condition for profitable mining, the expert called the low cost of electricity, no more than 5 rubles. per kW, and the desirable use of the latest generation of mining equipment – it has high energy efficiency.
If we talk about the cost and benefits of mining in Russia, we need to consider two types of mining: on ASIC miners and on video cards, Roman Nekrasov, co-founder of the ENCRY Foundation, explained.
He explained that, first of all, bitcoin is mined on ASIC miners, as well as Bitcoin Cash, Litecoin, etc. Here, the cost of new equipment is quite high, there are no big discounts, the expert says.
But, he drew attention to the fact that a lot of used equipment appeared on the market – it is still the remnants of Chinese equipment that were turned off after the ban on mining in China. Also, part of the “used” equipment comes from Iran, where there are difficulties with mining due to a lack of electricity, and something comes from Abkhazia, Nekrasov added. At the same time, he noted that this equipment is not very energy efficient, and in a bear market, every penny counts – now bitcoin is trading slightly above the cost of production.
According to the expert, if a person wants to invest several million rubles in a mining farm (it makes no sense to enter the industry with a smaller amount), he can buy several of these ASIC miners, and also find a mining site, preferably somewhere in Siberia with a cheap electricity. At the same time, the profitability will be meager, almost everything will be eaten up by after-sales service, if the investor does not plan to be on the farm on his own and monitor his equipment, says Nekrasov.
He also noted that a small number of mining machines suggests that this will not be a separate farm, but some kind of data center, which offers places for connecting ASIC miners for a fee. If you buy new equipment, you will have to wait for several months, the expert explained.
The director of the online store Hardvar.ru also noted that now the delivery time has increased due to the heavy load of logistics routes from China. In practice, there was a situation when the cargo did not depart from China, and the flight was postponed for 1.5 months, Sharov said.
If we talk about video cards, then the most popular cryptocurrency for mining – Ethereum – is now switching from PoW to PoS, which means that Ethereum mining will be stopped in mid-September, Roman Nekrasov, co-founder of the ENCRY Foundation, recalled. He explained that these miners will have to look for other cryptocurrencies and reconfigure the equipment.
The expert pointed out that now the prices for video cards have dropped significantly – however, this applies to the world, but not to Russia. NVidia has stopped selling equipment to our country, and all video cards will now be imported in parallel or will be imported through third countries, Nekrasov explained.
He clarified that this would make the logistics long and expensive, which means that Russian GPU miners are unlikely to feel a significant reduction in equipment prices. However, the depreciation of the dollar may slightly offset the costs of transportation, the expert believes.
According to his estimates, it is also not worth entering GPU mining with an amount of less than 1-1.5 million rubles, this is the very minimum. It is advisable to start mining with 3-4 million rubles. what is in ASIC, what is GPU mining, according to Nekrasov.
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