Key facts:
ROI for a Bitcoin miner takes longer but when calculated in dollars earned.
If the price of equipment goes up, there is usually a growth in demand for ASICs.
A longevity race. This is a possible new narrative of the Bitcoin (BTC) mining market, where the development and acquisition of new equipment become more expensive as the hashrate and difficulty grow, forcing operators to think of an investment rather than long term.
In these last weeks, both the difficulty and the processing of the Bitcoin network reached all-time highs. Both events were covered by CriptoNoticias.
The index that measures the complexity of the blocks that miners have to solve to obtain the reward reached 27.11 trillion, a number never seen before. A little earlier, it became known that the network processing rate set records. As recorded by this medium, the Bitcoin hashrate reached 248.75 terahashes per second (TH/s).
That scenario had implications for the market for application-specific integrated circuit (ASIC) miners, especially as it relates to the longevity of their economy, according to the mining company. Compass Mining.
According to the firm, an ASIC miner, which is the only device that can face the difficulty, find a block, mine it and get the reward in bitcoins, is an elastic good associated with the Bitcoin mining process. In economics, elasticity refers to the relationship of supply and demand in the context of multiple goods or market prices.
As far as the mining market is concerned, if the price of equipment goes up, there is usually a growth in demand for ASICs. Therefore, if there is an increase in the demand for bitcoins, more miners would be likely to connect.
However, as each new mining equipment has small changes compared to its previous delivery, the growth in hashrate and difficulty “will limit the profitability of the activity”, the company explains.
A good, durable machine
Therefore, and seeing this, investors who want to venture into Bitcoin mining will have to target miners whose longevity allows them to achieve profitability in their operations. The money will start to earn at a lower rate, so the return on investment (ROI) could take longer than expected.
Compass Mining solves it this way:
Despite a breakthrough in ASIC technology, next-generation machines may no longer discount price, but will rely on longevity to reach profitability. The useful life of the ASIC will have to be extended for it to recover the investment.
Compass Mining, a company dedicated to Bitcoin mining.
Even so, it is known that the profitability of Bitcoin mining depends on several factors. The lucrative nature of the activity makes it essential, in addition to the necessary machinery, to be clear about key elements, such as the right place to carry out the activity, positive regulation and a suitable climate for equipment maintenance.
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ROI in USD takes longer than in BTC
The return on investment made by a Bitcoin miner takes longer but when the earnings are calculated in US dollars. According to BitInfoCharts, the cost effectiveness of Bitcoin mining is, right now, about USD 0.17 per day for each terahash.
For example, when talking about an Antminer S19 Pro+ Hyd (whose official launch is scheduled for May), the approximate ROI is two and a half years. In accordance with ASIC Miner Value, this miner will generate earnings of USD 6,780 annually in the current competition and difficulty terms. That equipment is being offered for over USD 16,000.
In the case of the Antminer S19 XP, the ROI is also expected to be just over two years. Generating earnings of USD 6,960 on average, this equipment would take more than 700 days operating to return the initial investment.
And in the case of the Antminer S19j Pro, the ROI in USD would be realized in around three years from its acquisition. This device generates annual earnings of USD 3,583 and it is sold for the order of USD 10,000.
But that does not happen if the investment is measured in bitcoins. The ROI could be advanced as the price of BTC rises. Therefore, there is a trend of miners who have opened up to hodling, as CriptoNoticias reported earlier this Monday, February 21.
It is a change of logic among those who process the network, who, based on loans, may be preferring to keep their rewards in bitcoins and not change them to dollars or euros, where the price of BTC faces ups and downs that could affect the performance of a miner.
Although the synthesis of all this points to long-term investment, where the evaluation of the miners will have to be a preliminary step before starting to carry out the activity, the good thing is that it continues in the narrative of an industry that, even complex, will continue and allow to reinforce the security of the network more and more.