Mining returns to new demand with Bitcoin price increase

The rise of Bitcoin keeps the altcoin market lively and video cards are back in demand worldwide.

Bitcoin miners had more than 7 billion reais in profit in August this year, surpassing December 2017 profits and only behind the month of March this year, where they profited about R$9 billion.

Bitcoin mining income
Bitcoin mining income. Source: TheBlock

THE mining of the second largest cryptocurrency, the Ethereum, also presented good profits to miners in 2021.

As it is a currency mined through video cards (GPU) instead of ASICs, countries like Brazil end up adopting this form of mining, since it is easier to find GPUs for sale than ASICs, in addition to other technical issues.

New demand for mining equipment with GPUs causes a rush to stores

O return of investment in mining depends on the cryptocurrency price mined, the difficulty, the reward and the price of energy, in addition to the initial investment.

Difficulty is a term used to determine the probability of mining a block. This calculation considers the total hashrate of the network. Currently, we are at the highest historical peak and there is no better graph to demonstrate the strength of this sector.

In an interview with VnExpress, Quang Thuan, owner of a chain of stores in Vietnam, revealed that sales by ASICs and GPUs tripled this month, when compared to the previous month.

Although the burning of ETH, due to EIP-1559, is causing the ETH reward per block to fall, this change helped the price of the coin to pass R$20,000 for the second time in history.

Furthermore, another sector of attractiveness is that the use of the Ethereum Blockchain, in the DeFi and NFT sectors, distributes generous fees to miners.

Ethereum Mining Difficulty
Ethereum Mining Difficulty. Source: Etherscan

the risks

Every investment has a risk, and this one is no exception.

Fluctuations in the price of Ethereum and the high cost of energy in Brazil, for example, are the biggest dangers. However, they are not the only ones.

Without taking the fees into account, if the price of Ethereum drops 50%, theoretically, the miner’s revenue will also drop 50%.

As the cryptomarket is extremely volatile, this is a risky scenario to consider before investing in mining — but if you’re optimistic and think the price of Ethereum will double, it might be better to buy ETH than mine.

The current crisis in the energy sector in countries like Brazil is also worrying

When we talk about cryptocurrency mining in Brazil, the energy cost is the main villain, leaving other countries at an advantage.

Reservoirs in the South, Southeast and Center-West regions are suffering from lack of rain. Currently, these regions represent 70% of energy generation in the country.

With this, an extra fee of 14.20 reais per 100 kWh was implemented by the government to reduce consumption and is effective until April 2022.

In addition to these two points, there is also the migration of Ethereum from Proof-of-Work (PoW) to Proof-of-Stake (PoS), the so-called Ethereum 2.0, which will end the mining of currency through graphics cards.

Despite all the above mentioned and also that there are other currencies that can be mined, none of them come close to the returns offered by Ethereum, when mining is done via GPUs.