In the early days of crypto, hobby miners were able to generate enormous profits using ordinary GPUs and even CPUs. Today, things have changed: a new report suggests individual mining is no longer profitable.
Mining pools have increasingly dominated the crypto space. As institutional investors continue to throw money at crypto projects, smaller miners are being forced out.
Individual bitcoin mining hasn’t been very profitable for years. Even several years ago, you were unlikely to earn much profit with a high-end GPU individually mining bitcoin.
In recent years, owners of high-end GPUs resorted to mining altcoins like Ethereum. GPU-based Ethereum mining allowed individual miners to earn valuable profits.
Now, the new report suggests that GPU-powered Ethereum mining is no longer profitable.
As reported by CNBC earlier today, “cryptocurrency mining on your own is no longer profitable.”
“The business of “mining” new cryptocurrencies using high-powered computers is no longer profitable for the cryptocurrency ethereum. The profit per month of mining ethereum using a graphics card called a GPU is down from about $150 last summer, to an estimated $0 for November of this year, according to analysis by Susquehanna.”
Last year, an individual miner could generate profits of $150 per month mining Ethereum using a GPU. Today, those same miners would struggle to break even.
Why has Ethereum mining suddenly become less profitable? It’s a combination of different factors.
Part of the problem is the price of Ethereum itself. As cryptocurrency prices collapsed throughout 2018, ETH prices have collapsed with them. As we go to press, ETH sits at around $187 after trading near $200 for the last few months. Overall, ETH is down 70% on the year.
Another problem is the declining hashrate of Ethereum. Ethereum’s hashrate fell substantially in 2018. A lower hashrate means fewer opportunities for miners to win a block reward.
Chipmaker Nvidia Also Feeling The Crunch
Meanwhile, chipmaker Nvidia has also felt the crunch of declining Ethereum mining profits. Nvidia’s flagship GPU became extremely popular among crypto miners because it was a sure-fire profitable investment: you could buy the GPU, dedicate it to mining Ethereum 24/7, and generate hundreds of dollars in mining profits. Today, those profits are no longer available.
The effects of this drop are being felt at Nvidia. As reported by CNBC:
“Chipmaker Nvidia is losing sales as a result. The company's crypto-related revenue is down roughly $100 million quarter over quarter, Rolland said. He predicted that the company's cryptocurrency-related revenue will be “likely close to zero” in its third-quarter report out Thursday.”
An Nvidia spokesperson added that the company is estimating “very little revenue from crypto-related GPU sales in the quarter.”
Bitcoin’s Hashrate Is Also Plummeting
More evidence of the tumultuous crypto markets can be seen in bitcoin’s hashrate. Bitcoin’s hashrate has plummeted this week.
Overall, hashrate has dropped across the crypto space amidst plummeting crypto mining profits.
It’s not exactly a surprise that bitcoin’s hashrate has fallen: the hashrate has plateaued for weeks. Earlier today, however, was the first time hashrate had truly began to fall.
Bitcoin’s hashrate set a record earlier this year with 61 exahashes per second, reaching that mark in August. Since then, bitcoin’s hashrate has dropped 30% to 43 exahashes.
Is A Bull Run In 2019 Still Likely?
Despite declining mining profits for individual miners, many analysts are still hoping for a bull run in 2019.
As reported by NewsBTC.com earlier today, industry analysts Mike Novogratz and Nikolay Storonsky continue to insist that a bull run is likely in 2019.
Short-term, however, cryptocurrency prices are feeling the pain. Bitcoin reached its lowest price since October 2017 earlier today, hitting a mark of $5,550 and smashing below the $6,000 support level. Other cryptocurrencies followed a similar trajectory, witnessing losses of 10% to 15% across the board.
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