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- Is crypto mining still a viable business?
- Can individuals create enough revenue to produce a profit from crypto mining?
- What does the future hold for crypto mining operations?
The new way to make money crypto mining in Sweden is by not paying the electric bill. It sounds funny but this may be the policy of one crypto mining operation that was based in Sweden, NGDC. NGDC’s crypto mining operations in a northern county of Sweden compiled an electric bill equal to an amount of $1.55 million during the time they were actively engaged in crypto mining. NGDC’s administrators are now nowhere to be found. And a $1.55 million bill is still waiting to be paid. When you look past the sensationalism of the headline, a new creature may be appearing above the horizon – a creature that has lost hope in creating wealth through crypto mining: the disenfranchised and discouraged crypto miner.
The cost of electricity in Sweden is relatively inexpensive compared to other first world countries. The cost to mine one Bitcoin is on average about US $4,700. That fact made Sweden a prime location to set up cryptocurrency mining operations. Even in today’s Bitcoin bear market, with Bitcoin worth about $3,900 at the time of this writing, there is still the potential of Bitcoin gaining value above $4,700 again.
So why would NGDC walk away from machines that generate value when you turn them on? Do they know something the rest of us don’t? There could only be one of two reasons why NGDC bailed out of their operations in Sweden. 1) They knew how to take advantage of an unsuspecting Swedish utility company and municipality that did not expect or prepare for this type of cyber theft. Or 2) NGDC lost confidence in the revenue source of crypto mining and no longer wished to capitalize their crypto mining operation.
If theft was the motivation for NGDC’s enterprise from the beginning, then let’s see what they were able to get away with. The electricity bill was $1.55 million. The approximate cost to mine one Bitcoin in Sweden is $4,700. Therefore NGDC may have been able to mine about 329 Bitcoins. Three hundred and twenty nine Bitcoins have a current market value of $1,286,000, certainly not worth the cost of the electricity. But 329 free Bitcoins can have significant value at some point in the future if Bitcoin’s value climbs to its record high price of $19,000 per coin.
The second possible reason for NGDC’s departure from their crypto mining operation could be that crypto mining is not a profitable business anymore, for startup operations. It is also very difficult to profit from crypto mining as an individual at this stage in the development of the cryptocurrency market. The sophistication of the hardware owned by well financed crypto mining operations, and the short amount of time it takes for computing hardware to become obsolete, add to the difficulty of individuals making a profit from crypto mining. The latest piece of information to determine whether crypto mining is still a profitable enterprise is the fact that 8BTC, a Chinese crypto outlet, reports that major crypto mining operations like Bitmain are selling off their hardware by the kilogram instead of by the unit. Application Specific Integrated Circuit (ASIC) hardware that sold for approximately $2,900 a year ago is now being sold for about $144.
The evolution of the cryptocurrency market has moved Ethereum and EOS to choose the proof of stake method to verify the data added to their blockchains. The proof of stake protocol requires forgers to stake at least $1,000,000 just to be eligible to forge cryptocurrencies within a protocol. Be advised that a $1,000,000 stake in the cryptocurrency still does not guarantee you get the opportunity to verify data on the blockchain. You still need the votes of others that have a stake in the cryptocurrency to get the right to forge a block of data to the blockchain and receive the forging fee.
Tying all this information to the action taken by the NGDC crypto mining operation, it seems, most likely, that crypto mining became unprofitable. Unprofitable to the point that NGDC abandoned all their hardware and skipped town to avoid paying for the electricity used during the period of time when their mining operation was functioning. If there is a consolation for the electrical utility company and the municipality, they may have acquired free crypto mining hardware that can be used in some way to compensate for the money lost from NGDC not paying their bill.