Crypto Mining Profits Fluctuate Amid Algorithm Tweaks and Turbulent Market Dynamics
The profitability rankings of crypto mining networks have experienced notable fluctuations in the past two years, reflecting market dynamics.
Crypto mining profitability has experienced notable shifts over the last two years (2022-24), with changes in algorithm rankings, evolving electricity costs and fluctuations in the values of different cryptocurrencies contributing to the dynamic landscape of mining operations.
As of January 2024, there have been changes in the ranking of the most profitable cryptocurrency networks for mining compared to the situation in 2022.
In September 2022, Kadena was identified as the primary mineable proof-of-work (PoW) algorithm, allowing miners to acquire Kadena (KDA).
However, at present, the leading position for the most profitable PoW network in mining is occupied by Kaspa (KAS), which employs the Kheavyhash algorithm. On Sunday, Jan. 21 2024, it was reported that mining with a hashpower of 9.2 terahash per second (TH/s) using the Kheavyhash algorithm is estimated to generate approximately $69 per day, according to data from asicminervalue.com. This calculation takes into account the daily electricity expense rate of $0.12 per kilowatt-hour (kWh).
In September 2022, Bitcoin’s SHA256 algorithm ranked as the seventh most lucrative PoW network for mining. At present, Bitcoin’s SHA256 ranks second in terms of profitability.
However, the recent increase in the value of Grin (GRIN) has raised the Cuckatoo32 algorithm to a higher position in terms of earnings. Under the consistent electrical cost of $0.12 per kWh, a miner with a capacity of 36 graphs per second (GPS) can realize a daily profit of $12.29 by mining GRIN.
In comparison, the SHA256 algorithm of Bitcoin closely follows, with machines featuring hashpower between 335 and 390 TH/s expected to generate daily earnings ranging from $10.60 to $11.52, assuming an electricity rate of $0.12 per kWh. Notably, high hashrate-producing devices are predominantly manufactured by Bitmain and Microbt.
Navigating Digital Gold: Crypto Mining’s 2024 Algorithmic Landscape
It is projected that in 2024, the two most profitable mining algorithms are Ethash and Blake2B-Sia.
Ethash is associated with cryptocurrencies such as Ethereum classic (ETC), and miners proficient in handling Blake2B-Sia can extract Siacoin (SC) and Scprime (SCP). An Ethash hashrate of nearly 6 gigahash per second (GH/s) is estimated to yield around $10.40 daily, while 17 TH/s of Blake2B-Sia mining power can generate about $9.27 each day, considering electricity costs of $0.12 per kWh.
Following Blake2B-Sia in the profitability ranking are the algorithms X11 and Kadena.
X11 mineable currencies, including Dash (DASH) and Cannabiscoin (CANN), can yield a decent return with the right hashrate. Specifically, nearly 2 TH/s of X11 hashrate is estimated to generate about $7.57 daily. As previously mentioned, the Kadena algorithm has dropped in the ranking, but a substantial 177 TH/s of Kadena hashrate can still produce an estimated $7.47 per day.
Interestingly, the profitability of Scrypt mining has diminished compared to its peak in September 2022.
Scrypt, which mines Litecoin (LTC) and Dogecoin (DOGE), was the second most profitable consensus algorithm at that time. Today, Scrypt mining ranks as the 12th most profitable algorithm, trailing behind others such as Handshake, 2, Randomx, and Cryptonightr.
Ethash previously held a dominant position in mining algorithms before the Ethereum upgrade, known as The Merge, which occurred on Sept. 15, 2022. Since that pivotal event, its profitability has been relatively lacklustre.
Miners Experience Record Daily Revenue
With the recent surge in Bitcoin prices, over the recent months — miners were achieving a record daily revenue in the profitability reaching as high as $40.13 million, by the time of writing, according to Blockchain.com.
The hashrate, measuring the computational power required for mining, has been hitting an all-time high, indicating the use of more powerful computers. However, despite these gains, mining, known for its high energy consumption, still falls short of the profitability seen in its peak in 2021.
With less than four months remaining until Bitcoin’s upcoming “halving” event, expected in April 2024, which reduces rewards for token production, leading miners are grappling with the prospect of a diminished share of rewards. In response, they are actively exploring strategies to prevent their profit margins from shrinking in this intensely competitive environment such as relocating operations to countries with more affordable energy prices and cryptocurrency-friendly governments.
The changes in rankings over the past two years indicate a shifting landscape in cryptocurrency mining profitability.
Against the backdrop of Bitcoin’s recent surge and rising record daily revenues from mining, the energy-intensive crypto mining sector seeks strategies to safeguard profits ahead of the halving, unveiling the industry’s resilience and adaptability.
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