Crypto mining’s cost: How has hardware availability changed the industry?

Mining is an attractive activity for different people. Fans of various financial instruments or those wishing to invest when deciding to start mining activities should take into account several aspects. Until now, mining is inextricably linked with the costs of equipment and electricity, the need to take into account the climate, the relevant laws and permits of the country. In 2022, the mining situation has become more severe. 

Previously, to start mining, it was enough to buy a graphics processor (GPU), read the operating instructions and you can start mining coins. Such prospects interested many and a large number of novice miners appeared on the market. Over time, with the advent of various difficulties, the need for miners for special equipment for cryptomining has increased. Such equipment became specialized integrated circuits (ASICs), which increased the speed and efficiency of currency mining. But now environmental problems have begun, there is a shortage of equipment and qualified employees.  

In the summer of 2021, a severe shortage of graphics cards began. And this is the main component of the mining installation. Those graphics cards that could still be obtained cost huge sums, which users did not like very much. The resulting shortage became even stronger during the COVID-19 pandemic. People sitting at home, out of boredom, began to assemble PCs and create even more disruptions in global supplies. 

Nvidia, a major manufacturer of graphics processors, attempted to limit demand by installing special equipment that limited the hashing speed. But the miners managed to bypass the innovations.  

At the beginning of 2022, the situation changed slightly. The value of the main currencies at the end of January (Bitcoin (BTC) and Ether (ETH)) fell to the lowest levels in July 2021. Due to falling prices, the GPU market has suffered, because mining has ceased to bring the desired income. In addition, in many countries, certain prohibitions have been imposed on this activity. The demand for graphics cards began to fall. Nvidia reports that the cost of the Sapphire GPRO Radeon X080 card, which was designed specifically for mining, has fallen by about 40 percent. The price at the end of January 2022 was about $ 1400, now it can be purchased at a price of $ 860. 

The upcoming transition of the Ethereum blockchain to the proof-of-stake protocol also did not affect the interest in graphic cards in the best way. With this protocol, large computing power and high-performance cards will not be required. 

Prices began to fall not only on mining cards, but also on graphics cards with video outputs designed for graphics processing. Nvidia and AMD gaming card series are also falling in price, as well as specialized equipment. 

Large companies, such as Ajinomoto Fine-Techno, have warned that by the summer of 2022, the number of necessary components for GPUs, which are necessary, including for the manufacture of Ajinomoto film substrates, will be greatly reduced. Intel is preparing to release a new line of bitcoin mining equipment this year.  

Bitcoin mining is quite stable in terms of the choice of models, Antminer S7, Antminer S9 and Antminer D3 from Bitmain are now considered popular. Therefore, the situation with ASIC is quite stable.  

Bitmain has received information about the imminent release of hydrocooling equipment, which should give miners the opportunity not to depend on the environment. But the cost of such equipment is too high.  

As the prices of GPUs rise, used equipment becomes an affordable option for purchase. This has become especially noticeable against the background of a general decline in income due to the COVID-19 pandemic. 

The number of people willing to engage in mining is growing and therefore the resale of equipment is quite profitable, especially for powerful video cards and ASICs. Other required equipment (motherboards, coolers, etc.) are bought mainly in retail stores for the usual cost. Before buying, it is very important to compare all the options that are sold and at what price. A profitable purchase would be to buy directly from the manufacturer, but it is quite problematic to implement. Also, with a wholesale order in an online store, the price of the equipment will be lower. For example, GPU cards when purchased in bulk will have a price of about $ 200 per piece. While an ASIC can cost $1,600. 

Resale in mining is of interest not only to individual users, but also to companies. Compass Mining, a BTC mining service provider, has been reselling mining equipment at retail since November 2021. According to the company’s calculations, miners leave hundreds of millions of dollars on the secondary market every month. So, the demand is really great.  

In December, Foundry Digital, developers of digital assets and a betting company, launched a new platform called FoundryX, for the purchase and sale of Bitcoin mining equipment. MicroBT and Bitmain provided the company with more than 40 thousand mining machines for delivery to the site in 2022.  

It becomes easier for miners to purchase and configure new equipment. Opportunities to move to places with cheap electricity and loyal legislation also contribute to the activities of miners. 

Despite the global economic crisis, mining continues its development, according to analysts’ forecasts, by 2026 the value of the world market of mining equipment may reach $ 1.2 billion.  

Bitmain Marketing Director Nathaniel Yu gave a comment to Cointelegraph about the companies’ compliance with environmental regulations and the increase in the market. The appearance of new crypto mining operators on the market determines the further development of this sphere. Quite a large number of energy suppliers contribute to mining, the more of them there are, the more noticeable the growth will be. The use of hydro-cooling will significantly improve performance, which also has a positive effect. And with the development of data centers, new mining technologies will be able to provide longer cycles.