RIP mining: What are the alternatives in 2023?
Last year, when Ethereum transitioned to a Proof-of-Stake (PoS) consensus algorithm, many mainstream media outlets published articles proclaiming the death of mining. However, the question remains: has mining truly ceased to be profitable, and if so, what alternatives are available?
Back in the day, miners buying up graphics cards to mine cryptocurrency and causing shortages in the computer hardware market may seem like a distant memory. However, just a few years ago, mining was a lucrative business. Although, critics argued that mining was harmful to the environment and not profitable in countries with high electricity prices, leading to several "deaths" in the industry.
For a while, the most popular method of mining digital assets was through graphics cards and processors, known as GPUs. Ethereum was especially profitable due to its lower mining difficulty compared to Bitcoin. Miners bought up the most powerful Nvidia graphics cards, like GeForce RTX 3080, RTX 3080 Ti, and RTX 3090, which at one point tripled the prices of these cards. For instance, the basic RTX 3080 had a hash rate of around 95Mh/s, allowing miners to earn up to $30 a week per card during the peak of the bullish market, depending on electricity costs.
After Ethereum's transition to PoS, miners searched for alternative tokens to mine, including several Ethereum forks such as Ethereum Classic, Ethereum PoW, and others. However, according to WhatToMine, the profitability of a farm with eight RTX 3080s is negative, meaning that miners are not making any profit, but only covering some of their electricity costs, let alone the farm's profitability.
Nevertheless, even in such a situation, there are still projects that bring profits, such as Alephium (ALPH), which operates on the Proof of Less Work (PoLW) technology. Under the same network conditions, Alephium uses only 1/8 of the energy compared to Bitcoin. Considering the capacity of the same RTX 3080, Alephium mining will generate more than $200 in the weekly income.
It is worth noting that as of today, according to the website Hotline, the RTX 3080 has lost 50% of its value compared to its peak in May 2021.
An alternative to GPU mining is ASIC – an application-specific integrated circuit, which is a device designed specifically for cryptocurrency mining. They are specialized for mining coins with particular hashing algorithms. For example, Bitcoin and its forks use the SHA-256 algorithm, while Litecoin and Dogecoin use the Scrypt algorithm.
ASICs have higher hash rates compared to their analogues and are easier to set up, making them advantageous. According to WhatToMine, using ASICs is profitable for most popular coins under current market conditions.
More exotic mining methods include HardDrive mining and 5G mining. However, these mining methods allow users to mine only specialized tokens, which is the reason why they were developed.
A hard drive is required for mining the Chia token from Chia Network. This blockchain is built on the Proof-of-Space-and-Time (PoST) algorithm, which is a competitor to PoW and consumes less energy. This is why HDD farms are cheaper and more energy-efficient than GPU farms.
According to specialized Chia mining calculators, under current market conditions, a farm consisting of 100 plots (10 TB on HDD) would generate a monthly income of just over $4. This type of mining is completely unprofitable.
5G-powered mining is built around the idea of increasing wireless network coverage through users who have purchased special 5G modems and receive rewards in the form of tokens. We're talking about the HNT token of the Helium network. The cost of modems starts at $1000.
In the summer of 2022, when the HNT price reached $10, such mining generated yearly profits of $400 per device. It's pointless to talk about profitability at the current token price of $2.37. Although this type of mining has prospects in the future when the concept of the Internet of Things may gain wider use.
