The crypto market has grown more popular in a time of escalating global tensions and economic turmoil - Bitcoin, a trillion-dollar asset class, continues to trend upwards in 2022. It has become a mainstream trend to own Bitcoin and other crypto assets.
Mining, one of the ways to get Bitcoin, has captured the spotlight. However, in light of the costly computer hardware & software, as well as the power needed to keep mining rigs running, BTC mining can be a very expensive investment. Today, we will discuss whether it is still worth it to mine Bitcoin in 2022 and whether BTC mining is still profitable.
Are There Many Problems in BTC Mining?
The past year has witnessed one of the biggest changes in the history of crypto mining. As the Chinese mining industry suffered the toughest regulatory crackdown ever, plenty of Chinese miners had to find stable mining sites from scratch. It should be noted that following China’s crackdown on crypto mining, state regulators including Russia and the EU are also calling for a ban on energy-intensive models of crypto mining.
Though countries have different reasons for banning crypto mining, it eventually comes down to the fact that “BTC mining consumes too much electricity and energy”. It is reported that the annual power consumption of BTC mining worldwide stands at about 149.37 terawatt-hours, which exceeds the power consumption of Malaysia, Ukraine, and Sweden and is very close to Vietnam, which ranks 25th in terms of power consumption.
Meanwhile, as more BTC mining rigs go into operation, the mining difficulty of the network will continue to rise. Some insiders predict that the BTC hashrate may reach 300-350 EH/s by the end of 2022. However, the recent steady decline of the BTC price has led to a decrease in the overall mining revenue and longer payback periods.
These are signs that the “bear market” of BTC mining has arrived.
BTC Mining is Flourishing Worldwide.
China’s ban on crypto mining did not stop its domestic mining business from migrating to countries such as the US, Canada, and Kazakhstan. According to the relevant data, the US has become a new global hashrate center. Thanks to stable power supplies, miners and companies with mining sites in these regions are earning large profits.
As big institutional investors and listed companies in the west keep buying BTC mining rigs, the BTC mining process has become increasingly compliant and legal. From the procurement of mining rigs through the establishment of mining sites to mining pool settlement, BTC mining is increasingly as standardized as a conventional sector, which significantly reduced investment risks. As big institutions start to mine cryptos with clean, renewable energies, more mining companies follow the carbon-neutral trend or mine cryptos using renewable energy sources. This is a shortcut to achieving carbon-neutral targets, and also the key to alleviating global power shortages while improving the mining revenue.
Additionally, the global production of chips is curbed by the pandemic and recent military conflicts, which also restricted the production capacity of new mining rigs. Before miners can get their chips, new chips will first go to bigger industries like mobile phones, medical equipment, and transportation. As a result, mining rigs expected to work cannot function normally, which means that the expected date of the surge in BTC hashrate will be delayed.
At the moment, miners can receive steady BTC rewards as long as they have access to mining rigs, a stable mining site, and cheap electricity supplies. At a time when everyone is mining Bitcoin, what is holding you back?
As the classic quote goes, speculate in a bull market, and mine in a bear market.
At the moment, mining is still the most stable way to get Bitcoin. Although crypto mining remains bearish, the falling crypto prices are the reason why new miners should start investing for the next bull because they miss out on the last bull market. Compared with conventional industries, the mining business is a pre-primary market. As mining is backed by physical assets, the relevant risks are lower.
During a bear market, the mining industry enters its most dynamic period. In a bear market, funds flow to mainstream coins, which brings more dynamics to the mining industry. Meanwhile, when the Bitcoin hashrate reaches a dynamic equilibrium, significant growth will temporarily stop, and the mining difficulty will be comparatively lower. In a time like this, mining yields more coins. Moreover, when the market switches to a bull market, the payback period will be shortened.
Crypto Mining V.S. Crypto Trading
BTC mining rigs can be regarded as call options of the BTC price. The view that future mining revenue will go up as the BTC price rises fuels the demand for more mining rigs. Therefore, users should estimate the crypto price and the cost of mining rigs before starting to mine and pick the right time to get started. As long as the crypto price does not fall below the mining cost, they can profit. In addition, miners should also be mentally prepared and stock up on more coins by running mining rigs over the long run.
From historical statistics, the returns on long-term crypto holdings are often greater than swing trading. Investors have no idea whether they made the right call due to the great volatility of crypto prices. On the other hand, miners can enjoy an endless source of bitcoins from mining, and instead of worrying about the ups and downs, they just need to check the block rewards in their crypto wallets from time to time.
How to invest in crypto mining in a bear market?
If you plan to start mining Bitcoin now, please consider the following:
When the mining profit fails to cover the electricity cost due to the falling price, keeping mining will only bring losses, which means that miners would have to shut down their machines. To avoid such situations, you will need to get a new model with a high hashrate and low power consumption.
(2) Find stable mining sites and electricity supplies to ensure the steady operation of mining rigs.
Mining is like an arms race — whoever owns cheap, stable power supplies will be able to earn more mining profits.
(3) If no mining rig is directly available, you can also invest in mining on a well-established cloud mining platform.
When choosing a cloud mining service, please be careful with its validity and the location of the mining site.
(4) Deal with your mining profit with sound strategies.
You may choose to trade your mining rewards following the process of “mine, withdraw, and sell” or hold them over the long term with patience. During a bear market, long-term crypto holders tend to be the final winners.