The mining industry has won the trust of investors, but the complexity of mining cryptocurrencies is constantly growing, and the yield from a single device is falling.
The cryptocurrency industry is relatively young, but complex, and if you compare the pace of its development with traditional industries, a year of working with crypto assets can be equated to several years of working in a normal business. There is an opinion that the first incentive to the development of the cryptocurrency industry was mining.
Until 2015, mining generated huge profits, and the associated costs were quickly covered. The block reward was 50 BTC until 2012, and 25 BTC until 2016. Antminer S4+ or S5 models paid off in 3-6 months at a price per device in the range of $800-1100. Given that this industry was previously little known, only enthusiasts were willing to invest large sums.
The mass investor did not have confidence in mining, he preferred not to take risks, believing that the production of cryptocurrencies could be associated with financial pyramids and fraudsters. Despite the ability to return their investments in a short time and make a profit in the future, people preferred “more real business”. This position was long held by investors from Russia and the CIS countries, where mining developed at a fairly slow pace compared to Asia and North America.
Below is the earnings of miners from the hash power unit (1 TX / s) from 2015 to 2020.
In altcoins, the situation began to change in the spring of 2017, when Antminer L3+ ASIC miners appeared for LTC mining. As a result, the profit of miners briefly increased from $2-4 to $300, which caused a large demand for equipment. However, there is a reverse side of the coin is to engage in mining of steel even those who didn’t have the slightest idea how it works. Naive users invested in schemes that do not give any guarantees and do not have real mining equipment. The result was obvious-the invested money “burned out”.
Those who managed to make good money on mining, understood that for mining cryptocurrencies, not only the monetary factor is important, but also quality resources. First of all, competent investors pay attention to the political stability, legal framework, level of the country for investment, and only then to the cost of electricity. For example, in Venezuela, Paraguay, Iran and South Africa, electricity is much cheaper compared to China, the United States or Canada – less than $0.01 per kWh, but these countries are not engaged in the development of the mining industry.
As for the countries of Northern Europe and North America, relatively cheap electricity is the only plus for mining. In contrast to China, the cost of labor in these countries is several times higher,as well as the timing of work. Today, China remains the leader in hashrate and the number of mining farms.
Since mid-2017, people have been investing more actively in mining, which has become taken seriously by large investors, and this has contributed to an increase in inflows from traditional industries. The stability of the industry has improved, resulting in a” stretched ” period of return on investment. Every day increases the complexity of mining, as the number of coins is always reduced, and the rate increases. Although it is always 1VTS = 1VTS, $300 is no longer equivalent to one bitcoin, as it was in 2016. Therefore, we can conclude that the turnover of financial systems in the crypto industry is much greater than the turnover of mining. We are talking about financial services: cryptocurrency loans, zero-interest loans and custodial storage.
In recent months, bitcoin has been characterized by high volatility, which can be explained by the coronavirus pandemic. If you consider that the epidemic will inevitably be defeated, and the exchange rate of cryptocurrencies will stabilize, changing crypto assets to Fiat currency or buying mining equipment with them will not be the most profitable investment. For many, a cryptocurrency loan with a zero rate will be suitable, in which there is no risk of liquidation for the duration of the loan.
For example, a user is going to invest bitcoins in the purchase of mining equipment worth $2,200 per device with an electricity consumption of 3.2 kWh. The user has a 500 kW farm and will be able to purchase 156 miners worth $343,200. Let’s say that today this purchase will cost him 58 PTS at the exchange rate of 5900$. Many investors believe that if the bitcoin exchange rate rises, they will have to return much more. However, when covering a loan with a zero interest rate, investors return the amount they took, regardless of the exchange rate of the coins at the time of closing the transaction. At the end of the loan, the client returns their assets in the same amount, for example, 1 BTC = 1 BTC, but this amount will be equal to the amount in Fiat at the exchange rate not on the day of exchange, but at the end of the contract.
It turns out that if the bitcoin exchange rate increases at the time of closing the transaction, the investor will get a good profit. The advantage of a zero-rate Deposit is that there is no risk of liquidation, and the only disadvantage is that funds are withdrawn and settlement is made only after the end of the contract.
Compared to Asia and America, the CIS countries and Russia are not very active in the field of Finance – banks and financial institutions do not offer the population to actively earn on company shares, futures, swaps and options. Therefore, many people have a question: “Where and how to earn high interest rates, so as not to fall into the ranks of those who expect a return on their investment for a long time?» With zero-rate loans, you can not only buy the necessary equipment, but also earn money.
This can be done with Matrixport – an international platform for trading, investing, lending and storing the most popular cryptocurrencies, including BTC, USDT and USDC. The platform is managed by Bitmain, a Chinese manufacturer of mining equipment.
Matrixport’s current monthly turnover is about $ 125 million, and Matrixport holds assets worth about $500 million.Matrixport has branches in Hong Kong, Singapore, Russia and Switzerland. In addition, the service has opened accounts in American banks, which allows it to legally work with large amounts of investment in cryptocurrencies.