Long gone are the days when a halfway experienced technician could look for bitcoin on the side. In the meantime, it is hardly profitable to mine Bitcoin with conventional graphics cards – the industry has grown. Professional mining companies mine digital gold around the clock in huge facilities and are sometimes valued at over US$1 billion on the stock market. The actual profitability of Bitcoin mining can often only be guessed at.
For anyone interested in bitcoin mining and not wanting to leave digital prospecting entirely to big business, there is still an interesting option today: Compass Mining.
“Now anyone can mine bitcoin,” is the slogan of the company’s website. mining compass. The Wilmington, Delaware-based company sees itself as a marketplace that brings together private investors, hosts, and miners who own the right hardware.
Here’s how it works: Compass tries to make deals with hosts who might provide free space (often larger warehouses) for bitcoin mining, like this:
The majority of the listed premises (mining facilities) are located in North America, but Russia or Iceland can also be found among them. Each host has a corresponding hosting price (operating costs) and the sustainability of the type of energy used. Most of the hosts listed charge between $0.060 and $0.065 per kilowatt hour. According to the company, this includes Asic miner maintenance fees in addition to booth fees. Fairly cheap: In April 2022, the average price in Germany was 40.82 euro cents per kilowatt hour.
The explanation is obvious: on the one hand, these operators benefit from favorable commercial conditions with the corresponding electricity suppliers and are also generally located in regions with cheap and surplus energy.
Unlike so-called cloud mining, as a compass user you actually own the ASIC miner that is mining bitcoin – physically too. Additionally, you can choose a location in a desired jurisdiction where you want to operate (or have) your ASIC miner. You can resell the device at any time. The mining rewards are then paid into your own Bitcoin wallet.
One of the best miners is the so-called Bitmain Antminer S19j Pro with 100 Th/s (terrahashes per second). This is also used by most professional miners.
You can do some calculations on the ASIC Miner Value website. A conventional ASIC miner currently costs around US$12,200 at Compass (as of February 7, 2022). With electricity price rounded up to $0.070 per kilowatt-hour, the website calculates that you would have a profit of around $6,000 per year:
Of course, this changes depending on how the Bitcoin price is. During Bitcoin’s all-time high in early November 2021, the ASIC miner reportedly generated around US$40 per day. Calculated for the year, this would be approximately US$12,700. After deducting electricity and maintenance costs, this leaves a net profit of approximately $10,900 (excluding acquisition costs).
The highest profit is generated with a high Bitcoin price and a relatively low hash rate. This is especially the case when there are bottlenecks in the production of mining equipment, which can happen quickly in times of high demand and supply bottlenecks for semiconductors.
Let’s go back to our little calculation example. As you can see, an investment would have paid off in about two years at a current Bitcoin price of $42,000. However, assuming Bitcoin prices will rise, the investment will pay for itself much faster. So if you keep mining BTC instead of selling it right away, you can still take speculative profits with you.
Of course, the last question is how long such an ASIC miner can actually be used. Internet forums often talk about three to four years, sometimes even more. At the same time, we should not forget the risk that the price of Bitcoin does not hold the current $42,000.
In the example calculation above, a correspondingly high Bitcoin price would quickly translate into a sizable return – provided the Bitcoin miner survives the time they had to dig to recoup the investment. Of course, such an investment is not without risk. The following points should therefore be kept in mind:
- Anyone who has followed Bitcoin for a long time knows how volatile the price can be. Since the profitability of the miner ultimately depends on the price of Bitcoin, this can be classified as a significant risk.
2. On the other hand, you are of course dependent on the web host to some extent. If a site decided to shut down, they would be forced to move the miner. A prime example of this would be China. In 2021, the authorities decided to completely ban mining. As a result, thousands of miners had to empty their tents and move almost overnight. Many have fled to Kazakhstan or the United States. However, the overall hashrate quickly recovered.
3. Around $12,000 is a significant initial investment to invest in an ASIC miner to even participate. However, if you bring the necessary change with you, you could theoretically diversify your risk across multiple sites and wouldn’t be dependent on one host or country.
4. You should also beware of various scams. Compass Mining has been active in the market for quite some time and has established itself as a reputable supplier.
If you still don’t have the necessary change and still want to participate in mining, you might want to look into mining pools and cloud mining.
This article appeared in February of this year. It has been reviewed and adjusted accordingly for republication.
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