Bitcoin mining in 2023: is there any sense and prospects?

2022 Crypto winter

The past year has been a very challenging one for many Bitcoin mining companies. During the bullish market growth in 2021, when the psychological mark of the $60 000 bitcoin price was broken twice, many miners bought video cards, ASICs, and farms at inflated prices, hoping to recoup their investments due to further growth in the price of bitcoin.

But in 2022, the cost fell due to the global crisis, the collapse of several large crypto projects, and a sharp increase in inflation, the "crypto winter" occurred, and for many players in the market, mining ceased to pay off. Thus, Messari, a major analytical agency in the field of cryptoeconomics, reported that in 2022 the largest public mining companies sold about 40 thousand BTC from their reserves, up to 98 percent of the bitcoins they mined.

The cost of a mining farm in 2023

At the dawn of the existence of Bitcoin, people could mine it on almost any home computer. Unfortunately, those days are long gone – the complexity of bitcoin mining has increased millions of times, and bitcoin mining on a simple computer in 2023 is almost impossible (more precisely, unprofitable).

The result was formation of mining farms that are not used for domestic purposes, but are tailored to perform the complex calculations necessary for mining.

So how much does it cost to assemble such a farm? For example, let's take 2 options - graphics cards farms and a ASIC farms

Graphics cards farms 

The graphics accelerator of the current generation can be purchased for $800-1200. Let’s assume that you decide to make your farm on 10 graphics cards. Taking into account the accompanying components - a good motherboard, powerful power supplies and a frame, the total price of the farm will be around $12 000-15 000. And we calculated a fairly small, almost home farm for 10 graphics cards.

ASIC farms

For an ASIC solution, prices will be even higher. Thus, the cost of one of the most popular ASICs Bitmain Antminer S19 XP is around $6500 – and usually farms are assembled from at least 5-10 such devices. But for this amount, ASIC farms offer significantly more power and sharpness specifically for cryptocurrency mining, which increases its efficiency compared to mining on video cards. 

There are convenient calculators that allow you to evaluate the profitability of mining a particular cryptocurrency on a video card or ASIC. We recommend Minerstat - you can try to build a virtual mining farm on it and evaluate whether such a solution will pay off.

What determines the profitability of mining

1. The cost of electricity. By the way, you can manually enter the Hash-power, power consumption and the cost of electricity into the calculator to understand whether it is worth mining bitcoin on the equipment and those tariffs that you pay for electricity.
2. Difficulty of mining and the dynamics of changes in complexity. For example, the bitcoin mining difficulty graph can be tracked at https://btc.com/stats/diff - network difficulty is constantly increasing, which increases the complexity of bitcoin mining. 
3. The power of your equipment. Everything is logical here - in the pools, the reward is distributed in proportion to the power of each miner, so the greater the computing power, the greater the reward for the mined block.
4. Features of the legislation - for example, in 2021, the Chinese Central Bank banned mining and any transactions with cryptocurrency. An unpleasant surprise for those who have invested millions of dollars in farms in China. And after the mass exodus of miners from China to Kazakhstan and Russia, questions began to arise from the local authorities - for example, Kazakhstan introduced a tax on the production of cryptocurrencies, which they plan to increase.
5. Equipment cost - from $1000 for basic ASIC miner options to one of the most powerful NM440 options from NuMiner for $20000+
6. The amount of reward for each mined block. Thus, in the spring of 2024, another bitcoin halving is expected (a decrease in the reward for miners for a mined block and a simultaneous decrease in the rate of generation of new units of cryptocurrency), which will reduce the reward for a mined block from 6.25 BTC to 3.125 BTC. 
7. The price of the cryptocurrency you are mining. Therefore, already when assembling the farm, it is important to decide which cryptocurrency to mine and calculate the payback taking into account its price.
8. Pool fee. In 2023, almost no one mines alone - miners are united in pools, where everyone pays 1-3% of their income for the opportunity to join mining efforts.

What cryptocurrency to mine? Mining other cryptocurrencies compared to bitcoin

The era of bitcoin mining on simple computers has passed - as we wrote above, now for the extraction of almost any cryptocurrency, you need to build powerful farms and join pools with other miners. But is it necessary to mine bitcoin?

In fact, today bitcoin is not the most profitable and fastest paying currency for mining. BTC is considered the most popular and most famous cryptocurrency, by which many people measure the state of the crypto market as a whole. But this has led to huge competition between miners and a power race - the lion's share of the proceeds from bitcoin mining now goes to large mining companies that can afford to build farms for millions of dollars.

If not bitcoin, then what? The most convenient way to see which cryptocurrency is profitable to mine now is on specialized sites that compare the current profitability of a particular coin. On our own, we recommend Coin Warz - it allows you to quickly and easily see which cryptocurrency to mine and what is the overall situation in the cryptocurrency mining market in 2023.

Top 5 cryptocurrencies worth mining (according to Coin Warz, February 2023)

• Verge (XVG)
• Dogecoin (DOGE)
• Peercoin (PPC)
• Florincoin (FLO)
• BitcoinCash (BCH)

Our favorite bitcoin is in 6th place - it still makes sense to mine, but it may require more investment and will pay off a little longer.

Conclusion: is it worth mining bitcoin in 2023

Advantages:

• The most popular cryptocurrency with high liquidity;
• Cheap electricity in the CIS countries, which allows you to mine with more profit;
• Bitcoin on the decline after a record price of $60 000+ last year - due to the price drop, you can now buy video cards and ASICs at significantly lower prices compared to their cost during the bull rally;
• According to forecasts, in the spring-summer of 2023, the bear market will end, and Bitcoin will go up again.

Disadvantages:

• The bitcoin mining is getting more difficult every year - in order to get the same profit, more and more computing power is needed;
• Bitcoin mining requires significant costs for electricity and equipment;
• High competition in bitcoin mining, which can lead to an increase in mining difficulty and a decrease in profits;
• Gray legal status in many countries.