⇢ What Mining Bitcoin with a Profit Is ⭐︎

The Business of Bitcoin Mining 

Bitcoin mining is a business. Whoever does not understand this from the beginning may easily fail if they choose to approach it. Before the start of any business, you need good documentation and consideration on the field of activity (especially if you lack experience). Which is the necessary initial investment? How long will it take to amortize it and then to start making profit? Which are the additional costs involved? What amounts should I invest constantly, regularly, to keep an optimum level of the business? And so on and so forth. Of course, all these are obvious, common-sense things, but too many did not do their homework, especially when we talk about the mining of Bitcoin.

In 2017, the explosion of BTC price prompted many people to dive headfirst in cryptocurrency and mining equipment investments, without a minimum analysis of the sector. 

While, in November-December 2017, you could hardly find a really good video card on the sites selling PC components or on the secondary market, now websites such as olx.ro or Facebook groups dedicated to the cryptocurrency phenomenon have hundreds of offers in this range. And this is not limited to Romania alone – this is also reflected across the world.

Bitcoin mining in Romania

In Romania, Bitcoin mining went into free fall. To the best of my knowledge, all the bitcoin and cryptocurrency farms of Romania have closed down. I mean the public/commercial sector, not the private one. I do not know too much about the latter, but it is unlikely that things are better with it. This happens because in Romania the electricity cost is high (0.11-0.12 USD/kWh). Moreover, in 2018, the crypto market suffered a major correction (80.59% for Bitcoin and more than 90% for the other cryptocurrencies).

The last strong drop of the BTC price (of November 2018) was the last drop for most of the miners. Let alone the constant growth of the hash rate and the difficulties of the Bitcoin network over the years 2017 and 2018. All these factors pushed many miners into the closing of their operations. 

When mining Bitcoin, we always need to consider the hash rate and difficulty aspects. These elements are adjusted regularly (every two weeks). There’s a simple logic attached to it: the larger the number of miners in the network (increased competitiveness) the higher the hash rate and the difficulty. The good news for the miners is that they can draw full benefit from the adjustment of the difficulty every two weeks. If, against the backdrop of a downward trend of the hash rate and of the difficulty, the BTC price increases suddenly, the miners will be at an advantage. Both by its increase and by the higher amount of BTC they will gather in the two weeks. 

Is BTC mining still profitable?

Infallibly. But not in all the cases. The most challenging aspect is when you actually consider where, with whom and how you can mine Bitcoin.

For an answer to the first question 

I believe that in Romania it is not profitable at all to mine Bitcoin or other cryptocurrencies. I’ve mentioned one of the reasons above – the high cost of electricity. Another important reason is that the environment does not foster this activity. It’s different when you mine Bitcoin in countries where temperatures are low for a long period in the year. This is an advantage we do not have here. I would also add the absence of industrial-scale mining farms that should have made a reputation for themselves (like many Romanian exchanges have done it). Most of the potential investors do not have the necessary technical know-how, to the possibility of mining in one’s own home is not approachable. 

An answer to the second question

is more challenging. And this because the companies offering mining (cloud mining) services have sprung up all over the place in the last years. Many of them have been both non-profitable and fraudulent. In the few cases where some positive outcomes were seen (I mean here Hashflare and Genesis mining, two of the cloud mining giants), in the end, their services turned out to be unsatisfactory (see also the hack suffered by Hashflare). Now, both companies closed down the options of mining Bitcoin with them; the reason: it is no longer lucrative. Of course it is not lucrative for them any longer, since, in the past, they earned hugely in the context of an increasing price of Bitcoin and of other cryptocurrencies. 

For the last question

In my opinion (also shared by others), the sun has set on the age of cloud mining. Lately, a new business model has started to take wings: MaaS (Mining as a Service). This means that the investors are the owners of the equipment (called ASICs), and services such as hosting, guarantee of the mining operations and their maintenance are ensured by the Bitcoin mining companies. The MaaS model reminds of the FBA model adopted by Amazon. I believe both of them are excellent and an advantage for the clients.

To conclude, Bitcoin mining

is lucrative/profitable for the clients solely if an affirmative answer can be given to the three mentioned questions. We need to find a site where the climate can help us, where the electricity cost is as low as possible. Find a company with a business model different from the model that has dominated the mining market until now. It should handle everything relating to hosting and maintenance. Its activities should be 100% transparent and it should be reasonable as to the costs applied in exchange for its services.

Abel Dragomir
Team member of Elevate Group

• abel@elevategroup.io
• My Telegram: https://t.me/amable2017

Disclaimer: This is not investment advice. Please, do not avoid your own basic investigations into the matter. Do not invest more than you can afford to lose. You are responsible for your own financial decisions.