Recently Bitcoin and all altcoins lost around 30% of their value. This price drop might have caused some panic among the new miners who got into mining in the past year or two.

But all the seasoned miners are aware that this might be just the end of a cycle. Regulation is coming, and it is a good thing!

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What is happening with the mining profitability?

It is quite simple. The price plummeted by around 30%. The number of miners on the network stayed the same, in fact, the amount of miners is still growing. We can tell that by the still-rising Ethereum network difficulty. 

You can read why does mining profitability changes in this article where we took a look at the reasons behind the profitability drop.

Daily fiat mining volume drop

The price drop indicates a lower total fiat daily mining volume. A total fiat daily mining volume is a sum of all block rewards in a day times the price of the currency.

There are around 12,800 ETHs mined every day. If we multiply that by $4,000, we get a total fiat daily mining volume of $51,000,000. This was the fiat mining volume at the end of 2021.

Currently, the daily fiat mining volume is around $31,000,000. This is the amount of fiat that is “released” in circulation each day. That is a 40% decrease in 1 month. The number of miners increased by a small amount. So the miners now divide a daily reward of $31 million instead of $51 million.

Difficulty increase

Another aspect of the profitability decrease is a difficulty change. If the difficulty and the price would lower simultaneously in parallel the mining profitability would stay the same. 

The difficulty will regulate the number of blocks released in a given time frame. If there are too many miners on the network and they solve the blocks faster than they are supposed to, the difficulty will increase, thus allowing the blocks to be confirmed at the correct time intervals. This also works the other way around.

If the price stays at the same level, and the difficulty increases, this generally means that there are more miners (hashpower) connected to the network. So the same amount of reward gets spread out to more miners, thus the average reward per miner is lowered.

Example of difficulty increase and daily fiat mining volume decrease.

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What coin to mine in 2022?

In the past year or two, the most profitable coin for mining was Ethereum, by a long shot. This would allow miners to connect their rigs directly and mine Ethereum only. A miner only needs to take care of one wallet, one miner, one exchange, and one pool. 

Even though the payout fees and transaction fees for mining ETH directly are absurdly high for a small miner, the manual work needed with maintaining the profitability would be minimal.

In the case of comparable profitability of multiple coins, things get complicated. Mining coins like Flux, Conflux, Raven, and others directly and manually tracking when each coin is more profitable, changing miner configurations, tracking minimal payouts from pools, deciding between keeping the coin or selling to Bitcoin or other preferred currency, paying exchange fees, etc., is very time-consuming. 

NiceHash takes care of all the above with one single software. In situations where there are multiple coins with about the same profitability, a profit switching software like NiceHash Miner comes into place.

NiceHash miner will make sure that you are mining at the best possible profitability and you get paid in Bitcoin. It makes every miner’s life easier! Set-and-forget mining, yet highly efficient.

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What will the future bring for mining profitability?

It is important to note that the mining profitability in the past year was at record levels. It was expected that such high profitability could not last. If the price would not drop, the difficulty would rise to a certain level that would make mining less and less profitable. This was luckily prevented by the GPU shortage, but sooner or later, as more and more hashrate would be connected to the network, the profitability would drop (if the price wouldn’t increase) so that only the people in places with the cheapest electricity would be able to mine efficiently.

The past

Back in early 2018, when profitability dropped due to the price drop, all mining became unprofitable. Mining rigs and GPUs were sold for a fraction of the new price. 

Yet people who mined at the time, even if they made a small profit, actually earned more cryptocurrency than at the peak of the mining profitability.

If a miner with a single GPU hypothetically makes $100 per month now, that might equal to 0.04 ETH, but back in 2018, a miner with the same GPU would make $50, but that was about 0.5 ETH at the time!

Fast forward to the peak of this bull run, that would be $2250 per month!

Moral of the story: Keep on mining!

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