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John Martin 27 Jan 2024 ◦ 7 min read

What Does the Future Hold for Crypto Mining?

What Does the Future Hold for Crypto Mining?

In April 2024, the fourth halving of Bitcoin will occur, which means that the reward for miners will be halved. Simultaneously, the complexity of the network increases significantly. This raises the question of whether there are any prospects for mining by 2024. Let us try to figure this out.

What is mining?

Mining is the calculation of a limited number of cryptographic program codes by iteration through numerical combinations. 

A new cryptographic block is generated in the process. It contains information about coin transfers between users for a certain period, as well as a link to the previous block and hash amount. This information is key to successful block generation in a blockchain. After checking and verifying the new block, it becomes part of the blockchain and miners receive a reward in a certain amount of cryptocurrency. 

The mining process is laborious and requires powerful computer hardware as well as significant energy costs.

Mining cryptocurrencies requires specialized hardware, such as GPUs or application-specific integrated circuits, and a reliable internet connection. 

Additionally, miners can participate in online mining pools. The process of mining cryptocurrencies involves solving cryptographic mathematical equations using specialized software. Remuneration in such communities depends on the condition and contribution of each member.

The Turnaround of Bitcoin Mining in 2023

After a record-low hash rate in 2022, this year has become much more profitable for miners, despite the increase in total network complexity and hashing speed. Thus, in the first half of the year, miners accumulated 8,684 BTC in the form of commissions. For comparison, for the same period in 2022, the figure was only 2,325 Bitcoins, and for the whole of the last year, 5,375 coins.

The growth in savings shows that mining has become more profitable due to a sharp increase in transaction volume and commissions.

The hash rate, or mining performance indicator, also grew at an accelerated pace in 2023, from 249 EH/s in January to 609 EH/s by the end of the year.

Among the positive factors for the development of mining this year is the growth in the value of Bitcoin. Since January, the leading cryptocurrency has risen by more than 150%, making it possible to compensate for most of the hash rate growth.

What Awaits Miners in 2024?

In April 2024, a very important event for the entire crypto community, especially for miners, will take place: the halving of Bitcoin.

It runs every 210,000 blocks or approximately every four years. In 2009, the mining of one block resulted in 50 Bitcoins. By 2020, after three cuts, the reward had decreased to 6.25 BTC per block. After the next halving in April 2024, the reward will decrease to 3,125 Bitcoins.

It turns out that mining is twice as profitable. This is particularly true when mining a block alone.

In any case, after halving, the income of Bitcoin miners falls. 

To make this less painful, companies are creating more efficient cryptocurrency mining equipment.

Technology Advancements and Investment Trends in Bitcoin Mining

From a technical perspective, revolutionary changes were not expected. Miners continue to mine ASICs and use video cards. Nuances are important: ASIC is a higher level, and assembled specifically for cryptocurrency mining. However, they have one feature: the released models become obsolete relatively quickly, which directly affects the efficiency and, therefore, the profitability of mining. Here, you should make the best choice in the “Hashrate – Power consumption – Price" triangle.

New and powerful devices are constantly being developed and released. However, their costs and energy costs are also increasing. For example, the new Bitmain Antminer S19 Pro+ Hyd 198 Th/s miner costs approximately 4,000 USD from an authorized dealer. 

One of the most optimal options for solo mining is a mining hotel, in which all production conditions are met.

On the other hand, one can mine both at home and on video cards. They do not have the same power as Asiks, but the cost of an entrance ticket to the world of mining with a gaming card is significantly lower. This method is suitable for mining altcoins. Effectiveness depends on the algorithm and the complexity of mining a particular coin. The hash rate is not so high here, so costs and profits are lower. Again, in single mining, the cost of entrance tickets is constantly increasing, as is competition.

Developers are also improving the software. For example, Quantum Blockchain Technologies announced that its new artificial intelligence-based Bitcoin mining software increased the productivity of mining rigs by 260%.

Mining companies are investing large sums in new Bitcoin mining solutions. To date, Marathon Digital has acquired 78, 000 units of the most efficient Antminer S19 XP installations. Riot Platforms announced in June 2023 the purchase of 33,280 next-generation Bitcoin miners from MicroBT.

Large miners have the opportunity to purchase advanced and expensive equipment. Therefore, it will be easier for them to survive the upcoming halving of Bitcoin. However, in this case, solo miners remained in an unenviable position.

Beyond Bitcoin: Diverse Mining Opportunities

Mining is not limited to Bitcoin only. Several coins can be mined using various algorithms and software programs. Here are just some examples.

This is only a small part of cryptocurrencies that can be mined. A multitude of new assets are introduced annually.

Summary

The year 2024 is probably will be difficult for miners. Reducing the reward for mining a Bitcoin block, increasing the competition among miners, and increasing the complexity of the process will make it less profitable. However, those who use more advanced hardware and software will be able to minimize the drop in revenue. In addition, you can mine less profitable, but simpler coins from the point of view of mining.

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