The crypto market is not in the best shape right now - almost the entire 2022 can be characterized as one protracted phase of a deep correction or even a crypto winter. It is possible that the decline will continue. However, mining can still be profitable, even if the profits are not as high as in a bull market.
In this regard, let’s discuss the question: is it worth going into mining in 2023 or is this not the best idea? Note that forecasting in crypto is not an easy task, and everything listed below should not be taken as an unambiguous investment recommendation.
Should you start mining in 2023?
Key questions that potential miners ask themselves:
What equipment to buy - video cards or ASICs.
Is mining profitable in the long term?
Isn't it better to just invest in cryptocurrencies to keep them in your wallet until the rate rises?
It is difficult to answer them unambiguously. On the one hand, mining will be relevant as long as Bitcoin and other PoW cryptocurrencies exist, so miners will not be left without work. On the other hand, equipment has become more expensive, while the complexity of production is increasing. Accordingly, the return on investment is quite low. Plus – Ethereum has switched to Proof-of-Stake, which we will discuss in more detail later. In a word, mining now definitely cannot be called “easy money.”
Regarding simple investing in cryptocurrencies, crypto industry experts have no doubt that the market will recover, but when will it be? There is a possibility that it has not yet reached the bottom and the fall will continue. Profit will have to wait a long time. When purchasing equipment, you are purchasing a real product that can be sold if necessary. In addition, you can mine not only one cryptocurrency, but different ones, choosing the most profitable coins.
What affects mining profitability
Almost $900 billion is the total capitalization of blockchain projects at the time of writing. This is far from a record - at the peak of the crypto market it exceeded 3 trillion. Of course, the governments of different countries want to control this industry as much as possible. The miner is required to draw up a business plan in advance, taking into account the peculiarities of taxation in his country, as well as the factors listed below:
Prospects for specific cryptocurrencies for mining, expected price movements in the coming months.
The complexity of production and the dynamics of its changes.
Features of the legislation - permits, prohibitions, taxation, as well as the prospects for the adoption of new laws that could complicate or facilitate the process of making a profit from mining cryptocurrencies.
Launch of new equipment models with an optimal ratio of power and energy consumption to the market.
The risk of rising prices for electricity or the introduction of special increased tariffs for miners.
In the meantime, prices for computing equipment may also continue to rise as materials such as silicon become scarce. The attitude of environmentalists, who are trying with all their might to prevent the development of PoW mining, also plays a role.
Ethereum transition to PoS
Those who mined Ethereum, after the network switched to Proof-of-Stake, have several available solution options:
Switch to the Ethereum Classic cryptocurrency, which received an additional incentive against this background.
Switch to the EthereumPoW ether fork, which completely preserves the old Ethereum blockchain on Proof-of-Work.
Switch to some other PoW cryptocurrency.
Sell equipment.
Unfortunately, at the moment, none of the alternative projects are equal to ETH in terms of profitability, so many miners abandoned mining and changed their type of activity.
Payback of mining farms
Even before the start of mining, you need to consider a number of nuances and plan each step in detail, so as not to encounter surprises later. For example, where should the earned coins be stored, in BTC, ETH or some other altcoin? It makes sense to convert into fiat money only when the exchange rate is at a high level.
Select the appropriate video card model, calculate how many devices you need to achieve the planned power of the farm, and how much cost this will require based on prices in stores. Don't forget about additional components: motherboard, processor, SSD, RAM, power supply.
Use a mining calculator, such as WhatToMine, to calculate potential profits and find the most profitable coin to mine according to your conditions and the price of electricity.
What should you not save on in mining?
Apart from video cards (everything is clear here), you cannot save on the power supply. It should freely pull all connected equipment. In addition, for greater reliability, it is recommended to choose power supplies with at least 80+Bronze certification.
A very controversial issue is the purchase of used equipment. It is very difficult to check how worn a particular component is. If it fails a month after purchase, you will have nothing to prove and your money will be wasted.
The relevance of mining on ASICs
The mining calculators mentioned above will help calculate the potential income level of ASIC miners. For example, in the section https://whattomine.com/miners you can see the current list of the most profitable ASICs at the moment. These include those that are just planning to enter the market in the near future, so that investors can plan their purchase in advance.
Each device indicates which mining algorithm it supports and what the most profitable cryptocurrencies can be mined on it.
Please note that in the top right corner you can enter the cost of electricity in your region so that the profit is shown taking into account this factor. Knowing the price and profitability, you can calculate the approximate payback of the device, but these are only assumptions that are not guaranteed to come true.
List of useful monitoring resources
Each miner, in order to receive important information in a timely manner, should use sites such as:
Coinmarketcap and Coingecko monitoring.
A crypto exchange, for example, Binance, where you can even connect to a mining pool, you can also sell earned cryptocurrency or invest for additional income.
Thematic forums such as Bitcointalk, MiningClub.
Github, where you can view the source code of projects of interest.
Calculator - MinerStat, WhatToMine, etc.
Conclusion
It is difficult to estimate in advance how profitable mining will be in 2023. Therefore, we will give this advice: conduct your own careful research, study the blockchain projects that interest you, and only after that invest in mining if you think that the situation is favorable for this. Never use your last money for investment and do not take out loans.
