As China banned mining on its territory and closed the largest shop where 67-75% of the world's cryptocurrency mining happened, the complexity of mining almost halved. Many saw this as a sign of the opportunity to "enter" the industry, but their rosy dreams quickly shattered at the sky-high entry threshold.
Let’s take a look at what it takes to become a crypto miner from a complete beginner’s perspective. We won't be diving into what cryptocurrencies are and how they work, but instead focus on mining problems most novices might come across.
The first and obvious problem - getting appropriate equipment. Novice miners are better off starting their journey with a GPU setup. GPUs have lower operating temperatures due to their lower energy density, they are easier to find on the market and sell if you get tired of mining. Also, they do not become obsolete so quickly and are much cheaper than ASIC miners. Prices for suitable video cards start at $600, but don’t rush to Amazon yet. Due to the popularity of mining, it won’t be easy to find GPUs with mining-suitable specs for a fair price. Mostly because scalpers are very aware of the popularity and current shortage of these video cards.
What about ASIC-miners then? The starting equipment will cost you $1500-2000 and will pay off in about 4-6 months. But you’ll have to fight for it first. Legends say that ASIC miner manufacturers have started accepting pre-orders for 2023.
Finding equipment is just the beginning of the story, the key plot point would be making mining profitable. A flow of electrons in your socket called electricity costs money and miners consume colossal amounts of electricity. Get ready for an electricity bill the size your mind can not comprehend yet. There is a chance that you will never come out on payback. It's easy to guess why China received (and has already lost) the title of the mining capital of the world - cheap electricity.
Mining by yourself no longer looks so rosy? We’re just getting started. With blockchain being a relatively new technology, there is a lot to be improved and people always find new ways to make processes faster, cheaper and more efficient. Hardware update is another constant expense. Technologies never stand still and new, more efficient miners appear on the market. At some point, an outdated setup might become a drain for your budget and your earnings will reach the top that constantly drops lower. Without the constant updates and expansion of your farm, your endeavors will quite likely fail.
Ever wondered where all the equipment from Chinese farms went? Right now, it is moving to data centers under construction around the world. According to experts, the difficulty of mining will return to previous levels by the end of 2021, when this equipment is installed.
How do you feel about ecology, sustainability, recycling and all that? Cryptocurrency mining might not be your thing as it uses more electricity than some countries. A study done not so long ago by the Cambridge Bitcoin Electricity Consumption Index measured that global bitcoin mining operations consume nearly 120 terawatt-hours of energy each year. That amount is roughly equivalent to the annual energy consumed by the entire country of Sweden or, if we put it in a clearer perspective, it takes a month for an average American family to consume the same amount of electricity.
Last but not least - heat. Any electronic device produces heat, and the more electricity it consumes, the more heat is generated. And as we mentioned above, miners consume a lot of electricity. Although 1-2 GPUs generate heat like a gaming PC, unlike the latter, they run 24/7. This does not cause big problems at the start, but when expanding the farm, you should take this fact into account and get a pack of heatsinks and coolers.
Mining has a lot of flaws, but this doesn’t mean you should give up on it. Many projects are looking for new ways to fix these problems. Such a step was already taken when the world switched from GPU miners to ASIC miners, multiplying the efficiency of cryptocurrency mining. One of the projects, focused on changing the shape of the industry is called Minto. The DeFi mining platform housed in a hydro-electric powered mining facility in Northern Russia is looking to create a mining ecosystem that not only re-opens the door for regular people looking to give mining a try but will also help reduce carbon emissions produced by mining. Because Minto has access to a private green energy plant in an area where the cold conditions are ideal for mining, the entry price is low enough to make mining feasible for the average user again, instead of it being the exclusive domain of big mining corporations.
Despite all the good signs, with crypto, you never know. Minto is not the only DeFi project looking to do this, but it presents a revolutionary prospect. It is impossible to say how the mining industry will change in the upcoming months, but the crypto community is famous for working things out on the go.
