Meet the real miners | Is there still a chance to participate in mining now?

In order to let everyone understand the fundamentals of the mining industry, BlockBeats and 360 Computing Power have jointly presented the real side of the mining industry in the column "Getting to Know the Real Miners".

In the previous three issues of the "Getting to Know the Real Miners" series, we introduced "Getting to Know the Real Miners | The "pitfalls" encountered by miners in those years", "How long can S9 mine when the flood season comes?" and "If the price of coins falls, do miners have to shut down their machines?" Today's "Getting to Know the Real Miners" article will mainly introduce to you whether mining is still profitable now, as well as several current mining models.

Can you make money from mining now?

With the plummeting price of Bitcoin two years ago and the continued weakness of the financial market, the price of mining machines continued to fall sharply for a long time. A large number of miners selectively sold the mining machines they had bought at high prices, and the difficulty of mining continued to decline. However, in recent times, with the market recovery, the prices of mainstream digital currencies such as Bitcoin and Ethereum have been rising, and the market environment of small currencies has also rebounded significantly, driving the entire mining industry. A large number of miners have entered the market, increasing the difficulty of mining. Mining machines and related mining costs have also continued to rise. Is mining still profitable now?

There are generally two ways to obtain Bitcoin. One is to purchase it directly in the secondary trading market, and the other is to obtain it through mining. Mining can be further subdivided into self-mining, managed mining, cloud computing power, etc., and various settlement modes have been extended, such as PPS, PPS+, FPPS, etc.
Mining is the process of increasing the supply of Bitcoin currency. Mining also protects the security of the Bitcoin system, prevents fraudulent transactions, and avoids "double spending". Miners provide algorithms for the Bitcoin network in exchange for the opportunity to receive Bitcoin rewards. Miners verify each new transaction and record them in the general ledger. A new block is "mined" every 10 minutes, but with the development of the Bitcoin network, its difficulty adjustment mechanism, and the continuous increase in the computing power of the entire network, ordinary computers are no longer sufficient to complete the block. Later, graphics card mining, FGPA mining machines, etc. gradually appeared, and finally derived professional mining machines with powerful computing power. However, the computing power of a single mining machine is still limited. Faced with the ever-increasing computing power of the entire network, mining pools as operators that concentrate the computing power of miners immediately appeared; mining farms that place professional mining machines, stable power supply, and unified operation and maintenance have gradually become professional and refined.
The following is an analysis of the two existing mainstream mining methods:

Self-mining:

Electricity bill issue: Mining requires the mining machine to be fully loaded for a long time, and the power consumption will be quite high. There are many professional mining farms at home and abroad, such as hydropower stations, where electricity bills are extremely low, while more users can only mine at home or in ordinary mining farms, so the electricity bills are naturally not cheap. There was even a case in a community in Yunnan where someone was engaged in crazy mining, which caused a large area of ​​the community to trip and the transformer to burn.
Hardware expenditure: Speaking only of Bitcoin mining, mining is actually a performance competition of mining machines. Professional mining machines that use application-specific integrated circuits are specially designed for hash calculations, and their computing performance is also quite strong. Moreover, since their power consumption is much lower than that of graphics cards, they are easier to scale up and have lower electricity costs. It is difficult for a single graphics card to compete with these mining machines, but at the same time, the cost of such machines is also higher, including operation and maintenance costs, electricity consumption, etc.
Currency security: The receipt and payment of Bitcoin requires a long string of security keys, and most people will record this string of asset keys in electronic devices such as computers and mobile phones, but data corruption and loss often occur, which also leads to the loss of Bitcoin.
Systemic risk: Systemic risk is often seen in the Bitcoin network, and it is a common risk regardless of the mining model. The most common one is the fork problem. Forks will cause the price of coins to fall, and mining revenue will drop sharply. However, many cases show that forks benefit miners. Forked competing coins also need miners' computing power to complete the process of minting and trading. In order to attract more miners, competing coins will provide more block rewards and handling fees to attract miners. Risks actually make miners successful.
Cloud computing power:

Cloud computing power is a new mining model compared to self-mining. It is usually a computing power rental service provided by some large-scale mining farms. Mining farms can split the computing power of professional mining machines and sell them. Users can earn corresponding bitcoins by purchasing these split computing powers. For some miners who do not have sufficient funds, they do not have to invest a lot of money to build and maintain expensive mining farms, nor do they have to worry about maintaining the operation of mining machines every day. They can still earn income from mining. For large mining farms, selling split computing power is equivalent to crowdfunding for mining, and can also transfer the risks of mining farms in advance.
Compared with purchasing mining machines for mining, cloud computing has some relative advantages:

1. Electricity

The average price of household electricity is about 0.8 yuan throughout the year, while large mines have cooperated with professional power plants, and the average annual electricity price is 0.4. The electricity price during the flood season is only around 0.28, which is much more affordable than household electricity prices.
2. The price of mining machines depends on different purchasing channels. This is one of the costs of large-scale mining. The price difference between different channels and purchase quantities is also very large.
3. Professional operation and maintenance, more stable computing power income. Professional cloud computing power mines have more professional operation and maintenance personnel and professional mine management systems, which can monitor 24/7 to ensure the online status of the mining machine. Once it is found to be offline, it will be processed immediately. Compared with self-mining, it can be more worry-free.
4. Noise: Professional mining machines and cooling systems make a lot of noise when in operation, which is a big problem for the health of yourself and your neighbors. Large mining farms are usually built in relatively remote places, far away from residential areas, due to noise and power resource considerations.
5. No operation is required, the passive income mining machine runs at full capacity 24 hours a day, 7 days a week, and it is easy to encounter headache problems such as computing board damage, mining machine poisoning, power failure, etc. If you purchase the computing power of a professional mining farm, then these problems will have nothing to do with you.
How to calculate mining revenue

Because the computing power difficulty of the entire network and the price of the currency are uncontrollable and difficult to predict. Regarding the calculation of the payback period, you can use the corresponding mining platform formula:

- Daily mining income = block reward + block packaging fee (transaction fee for packaging transactions within the block; only the mining pool settlement fee method of PPS+ and FPPS can share this part of the income)
- Mining cost = hardware cost (mining farm hosting fee, mining machine price, etc.) + operating cost (electricity cost, labor cost, etc.).
6. Settlement mode: Self-mining is generally a PPS settlement mode, which estimates the daily output that can be obtained in the mining pool based on the proportion of the miner's computing power in the mining pool, that is, assuming that the luck value is 100% of the theoretical income. After deducting the mining pool fee, the miner is given a basically fixed income every day.
Assume that a miner accounts for 10% of the total computing power of the mining pool, and the mining pool charges a 4% handling fee. The theoretical income of the mining pool on that day is 10 BTC. Then he will get 10×(100%-4%)×10%= 0.96 bitcoins.
If you purchase cloud computing power for mining, it is usually settled in PPS+ or FPPS mode. Let's take the FPPS mode as an example. FPPS can be regarded as a complete PPS, which settles both block rewards and mining fees according to theoretical returns. Since we want to pursue stability, we should follow through.

In this model, suppose a miner accounts for 10% of the total computing power of the mining pool, and the mining pool charges a FPPS fee of 4% of the block reward. The theoretical income of the mining pool on that day is 50BTC, and the theoretical income from the mining fee is 10BTC. Then he will get (10+1)×(100%-4%)×10%= 1.056 bitcoins.
Compare the price differences between self-mining, cloud mining and the secondary market for the same Bitcoin.

Self-mining:

Self-mining is settled according to the PPS mode of 0.8 yuan for home use, and the mining machine is M20S

Whatsma M20S Parameters

PPS and FPPS settlement model data
The daily electricity cost of self-mining is 83.86 yuan, and each T produces 0.00000742 BTC≈0.605 yuan per day. The total daily output value of M20S is 41.20 yuan; the output value is not enough to deduct the electricity price, so the investment cannot be recovered.
Cloud Mining:

For the same M20S, the unit price of electricity is 0.4 yuan in FPPS mode. The daily electricity cost of cloud mining is 41.93 yuan, and the price of perpetual computing power per ton is 156 yuan. A mining machine will pay back about four months a year. The rest of the time is pure profit.
The price of Bitcoin in the secondary market today is approximately RMB 81,662, which shows that the profit from mining is still very large.
Money can definitely be made, but the profit mainly comes from the degree of effort and mining strategy.
First of all, electricity is the basis for you to ensure your competitiveness. Not only does the price have to be low, but it also needs to be stable. The lower the electricity price, the greater the advantage in the competition with the same cost input. And this advantage is particularly prominent in a bear market. The current computing power continues to grow, but when the coin price is below the threshold, the electricity price determines when you should shut down or when to subsidize the electricity bill. Secondly, the mining strategy also determines how much you can earn. Mining is the most stable way to make money in the currency circle, but there are two types of miners: one is to sell after mining and only earn block maintenance fees, and the other is to mine and hoard, relying on mining to maintain computing power. The former is more stable and has low returns, while the latter increases with the risk of coin prices and has high returns.
Summarize

In addition to investing in Bitcoin mining, some platforms also have mining machine rental products for other currencies, but it seems that the income from BTC computing power is the most stable and cost-effective. If you are a new miner, computing power investment is a behavior that can take a few months or even one or two years. You must choose a reliable platform. It is recommended to give priority to the cloud computing power of BTC in large mining farms.