Crypto mining
Today I want to dive a little bit into the history of mining and discuss whether it's worth getting into now.
History of development
CPU
As we already know, on January 3, 2009, the genesis block on the Bitcoin network was created, thank you, Satoshi. Since bitcoin was literally worthless at the time, only a few people were mining it.
So mining was available even from your laptop. All the calculations were done by the processor, and the approximate difficulty of mining a block was 4Gh/s.
The performance in mining is measured in hashes per second - h/s.
The hash rate of a device is determined by its speed and processing power, the hash rate of a network depends on the number of miners and equals the total power of active devices in the network.
The complexity of the network is governed by the difficulty of the task that is performed to obtain a block: to find the required hash. The difficulty is directly related to the hash rate and changes automatically. The more miners connected to the network, the higher the performance and complexity, and the harder the cryptocurrency will be to mine. The complexity of the network divided by the hash rate equals the time it takes to get a block. This is the time the network keeps constant.
At the time, the Intel Pentium 4 processor was producing 1.29 Mh/s. This meant that with one processor it took about 50 minutes to mine a block. And the miner was not getting 6.25 BTC per block (like now), but as much as 50 BTC!
So you don't get eaten up by FOMO and thoughts "if in 2009 I started mining..." it's worth reminding that bitcoin was not worth anything back then. And it's unlikely that any of the miners of those times could have thought that some digital coin they get now after 13 years could be worth up to $67,000.
GPU
The popularity of bitcoin and cryptocurrency, in general, slowly but surely gained momentum. And by 2010, conventional processors could not run at the speed necessary to match the increased complexity of the mining algorithm.
In September of that year, for example, an open-source bitcoin client was introduced that included video card mining, ushering in a new era of BTC mining.
The processing power on a single video card is equivalent to dozens of processors. Thus, the efficiency of mining was improved. Therefore, users began to switch to mining with a graphics processor.
FPGA
There were more and more miners, and the competition was growing. In 2011, FPGA (Field Programmable Gate Array) entered the market
Without going into too much detail, an FPGA is a special digital circuit that provides faster computation with less power.
ASIC
And in 2013, the first asics from the company "ASICminer" appeared. It consists of a chip for calculating codes, a cooling fan and a backup power generator.
The key difference between ASIC and FPGA is that the first ones are more powerful, but they are madly limited in their functionality. ASICs can literally only be used to mine a single cryptocurrency.
But this did not discourage crypto-enthusiasts, because they actually needed such computing power only for mining. Therefore, the asics quickly gained popularity and in the future several more companies began to produce their computing machines (Avalon, BFL).
Cloud mining
This type of mining appeared in the mid-2010s. It consists in the fact that the owners of large farms rent their equipment to users.
Thus, everyone remains in the black: users do not need to worry about maintaining their own farm and receive income from it, while the owners of the farms cover all the electricity costs and pocket the percentage of the mined blocks.
Boom 2017
Surely many of our readers have heard the news about mining and the shortage of graphics cards in 2017. This year can really be considered a breakthrough year for cryptocurrencies, because it was not some geeks on the Internet, connoisseurs of anonymity and decentralization, but ordinary people who started to talk about them en masse.
Gamers hated miners because of the skyrocketing price tag of video cards and their absence on store shelves, young entrepreneurs saw crypto as a way to make fast and good money, and gawkers were amazed at how an Internet coin could be worth several thousand dollars. But the fact remains that crypto was literally talked about at every turn.
Of course, all this happened for a reason. It was all due to the same halving in 2016. Bitcoin price did not immediately go to new heights, but gradually became more and more a tidbit for potential miners.
People began to believe in cryptocurrency, and that it is possible to earn real money by mining it. Therefore, in June 2017 there was already news about large miners with huge purchases of video cards (buying up 200-300 units at a time), the beginning of the growth of their prices and the shortage of top models.
To give you an example: the price of an AMD Radeon RX 480 graphics card in May-June 2017 soared from 16,000-18,000 rubles to 30,000-40,000 rubles.
But the story would not be so interesting if there were no unexpected twists and turns. December 2017, everything is great, bitcoin is trading at $19.600. All the early investors are already collecting the cream, and the new miners are rubbing their hands and imagine the further rapid growth of crypto and a wonderful life in Bali in half a year.
Alas, bitcoin had other plans. So in 2 months, its rate shrank three times, to $ 6.800.
Of course, against the backdrop of such a fall, miners began to panic (especially those who just came and did not pay off). It was already possible to forget about Bali, the discussion was at least not to go into deficit. And then people were divided into two camps.
The first are alarmists who sell their video cards on the cheap and scream that crypto is a scam. The latter are miners with steel balls (or fat wallets) who believe in the future life of crypto.
Of course, the former probably already caught FOMO a bunch of times when bitcoin started to show new highs in 2021. But no one could know the future...
Is it worth getting into mining in 2022?
It's hard to give an unambiguous answer here...
On the one hand, crypto is experiencing bad times, bitcoin fell by more than 75% from its maximum values, and mining has not become easier.
On the other hand - mining is still alive, bitcoin is not the only one, there are a lot of alternatives, and sometime the crypto-winter will be over. At least by 2024, BTC halving is predicted, but according to experience of previous years - always after bitcoin halving all crypto rapidly went up.
One thing is for sure - you should not go into mining, spending your last savings, hoping to get "easy" money. An average farm costs about $13,000 and pays for itself +- in 2 years.
You should also consider options such as: the continued fall of crypto, tightening of the screws by the legislature, higher electricity prices, and much, much more.
If you have a dozen thousand dollars under your cushion, that you want to invest in something, and you don't need it in 3 years - then you can consider buying a farm. But, classic NFA.