What Influences The Cost Of Mining Hardware?
Are you mining bitcoin as a hobby? Or are you mining as a business? Most people are looking to make money mining right? Investing in bitcoin, or alt coins? To get these massive cash injection overnight? Good luck. I hope it works out for you. Allot of people have made serious amounts of money from bitcoin.
So if you are planning to start mining bitcoin, these are a few things that you might want to think about. What influences the cost of mining:
Lets take the manufactures cost of manufacturing, research, design etc and then add whatever markup they desire to the retail price that they will be selling each unit for.
New Miners On The Network
These miners are then introduced to the mining network. Increasing hashrate. Increasing difficulty, making less efficient mining hardware depreciate in value. All effecting the time it takes to get your money back from your initial investment of mining hardware, and increases the time it takes to mine a block.
Electricity costs are a key factor in bitcoin / crypto currency mining. When a miner decides to scale their operation much more sophisticated electrical installations are required. Think warehouse type scenarios. Could some of the power needs be provided by solar power, or some other renewable source? Ie free ongoing power supply. Once the initial investment, and maintenance costs are taken care of that is?
Cloud Based Mining
Could mining avoids the cost of buying hardware, paying for electricity, physical hosting space etc. You do not own any physical goods, only a contract with a hosting company that they will mine for you at a certain mining speed, for a set period of time. And they take on all the liability of hosting the mining equipment. You just make your payment, and give them your mining info, then receive the mining rewards that you earn as payment.
So your risks here maybe if the company goes bust, does not honour your mining contract, hashrate maybe lower than expected, network difficulty increases to a level that makes cloud based mining unprofitable, and more. You will probably be paying for this service up front, so pls check the terms and conditions.
When using hosted mining you buy the mining equipment, ship it to the host (usually in a county that has low electricity cost), and they do the rest. You may have a virtual desktop connection of some sort to set up the miner, and monitor. The hosting company pays for everything else, electricity, cooling, ventilation etc. You will more than likely need to remote login and set the mining info, or the host may do this for you. And then you receive the crypto in your wallet as your hosted miner does the work in another part of the world. So pretty much your outlay is the miner and the shipping costs. Maybe the main advantage here is the saving on electricity. Work out your operating costs and make sure you are getting a worthwhile deal.
Now let’s say something goes wrong. Your miner gets damaged in transit, hopefully your insured and you can claim on the insurance. The hosting service goes bankrupt/steals your btc/runs away etc. Your miner develops a fault that the host will not repair. At this point would it be worth paying the cost to have the miner shipped back to you and you have it repaired?
Self Hosted Mining
If you have the time, able, and willing to learn self hosted mining means keeping the miners in your own premises. Wheater your home or other premises. You must pay electricity, and all other associates fees that go hand in hand with crypto mining.
If you are only running 1 miner then this is very simple. But if you want to scale your operation in any way, many considerations need to be taken. U many need to seek an electrician for advice, fire safety etc.
Many different mining pools are available for many different crypto currencies, and in lots of different mining algorithms. Some pools are solo mining for you. Where you are mining solo. If you find a block they take x percent, or you can join a pool that finds a block and splits it between all the miners that contributed to that block.
Heating And Ventilation
Miners produce a great deal of heat when in operation. This heat needs to be dissipated. Excess heat can also damage, and reduce the efficiency of the miner. And increased temperate could also have implications for safety in your mining farm. Too much heat could cause a fire hazard. Ventilation costs, equipment, fire prevention, etc have a cost influence deciding the size of mining operation you intend to use.
Market Prices And Sentiment
Bitcoin price fluctuations, because as we all know bitcoin is highly volitile, has and will cause price changes in mining hardware. When the price of bitcoin rallied in 2018 to roughly 20,000 usd per bitcoin, the price of miners increased accordingly. And as bitcoin price reduced so did the cost of miners.
Some miners will just simply decide to switch off their miners because the cost of mining becomes to high compared to the reward. This is probably the time you will see lots of miners being put up on eBay and other sites quite cheaply. The difficulty in finding a block may reduce slightly at this time, but will soon adjust to suit the network.
Heating Yoir Home
I’ve seen mentioned in various posts miners using the heat generated put to use heating their home. Would be a little bit noisey, but during the colder months of the year could maybe save some money on heating bills while earning crypto. If you are going to do thing type of thing I suggest u think about safety in your home, and seek the correct professional advice.
I’m sure there will be allot more that could influence the cost of mining for crypto currencies. But this will probably be enough to get you thinking about all the factors involved.