As part of its global expansion, Coinbase has announced that it has been granted regulatory approval from the Netherlands' national bank.
A mining rig is a computer system used to mine cryptocurrency There used to be several benefits of being a miner. However, due to the current bear market, the drawbacks of mining have come to overwhelm the perks. Here are the biggest three issues with mining rigs today.
A large cost involved with mining is the price of setting up a mining rig. The standard mining rig will generally consist of around six graphics cards, a power supply and the remaining parts of a used computer.
The most significant of these parts are the graphics cards. These can cost anywhere from $150 USD to $1,700USD. It is the graphics cards which determine the hashing power of the rigs Graphical Processing Unit (GPU). Simply put, this means better graphics cards allow mining rigs to mine cryptocurrency at a faster rate, at the cost of using more power. Hence the more high-end graphics cards one can afford, the greater profit they will be able to make.
Many people cannot afford these initial capital costs. Yet there is a bigger issue still waiting for the ones who can.
The primary cost of running a mining rig is electricity. The American company, Elite Fixtures, published a study in February of 2018 showing the electricity costs of mining one Bitcoin (BTC) in 115 different countries:
To date, in the United States, it costs approximately $4,758 USD to mine one Bitcoin.
These electricity costs were relatively insignificant back when coins such as Bitcoin (BTC) were at an all time high. The profits gained far outweighed the costs. However, as the financial values of these tokens have declined, so too has the profitability of mining.
Today, the most worthwhile coin to mine is Ethereum (ETH). An average mining rig with a hashing power of 40MH/s can produce 0.02840ETH or $4.22 USD per week, according to CryptoCompare. However, if we assume the average electricity cost of a mining rig in America is $2.40kW a day, according to the U.S. Energy Information Administration, then we can calculate the net profit a mining rig would produce. With an electricity cost of $8.40 USD a week and only a revenue of $4.22USD a week, you would incur a loss of $4.19USD a week. That is a near 99% loss.
It is mainly for this reason that many miners have shut down their rigs as they are only losing money in keeping them running. However, there is another reason why people may stop mining- even if they were incurring a small profit.
It is widely believed that once a mining rig is set up, nothing else needs to be done. Unfortunately, this is not the case. Much time and care must be placed into building the rig, adjusting it specifically to the miners needs and then dealing with any issues that pop up. Many small details can determine whether a rig will be able to mine or not.
These processes may be simple for a specialist to handle, but for the majority of the people who have no expertise in the field, much time and work will have to be put in to obtain a smooth and optimised system. This, combined with the high start-up and operating costs, means that the average person may be better off not mining at all. The small amount of profit one could possibly earn might not justify the arduous task of maintaining a rig.