The increasing use of cryptocurrencies will result in much higher volumes of safe transactions and even data due to industrial automation, the Internet of Things and artificial intelligence. This situation is going to have a huge influence on the mining industry, creating lots of opportunities for both miners and their customers.
Although there will be lots of new company coins in the near future, Bitcoin is still the leading crypto currency among the market.
Bitcoin has the advantage of a strictly limited number of coins, which leads to an automatic price increase as soon as the usage is rising further.
If we take a look at the price development of Bitcoin, it is clearly visible, that the last correction followed the pattern of previous corrections. There is a high probability that the next bull market phase is waiting just around the corner. Looking at that situation from a long-term perspective, no correction can break the upward trend.
As a matter of fact, some cryptocurrencies work without mining. Others (e.g. Ethereum) plan to reduce or replace proof of work confirmation.
Still, Bitcoin, being the leading coin, is completely based on mining. Thereby it is also the safest crypto currency.
Mining returns can be very volatile as price levels of crypto currencies fluctuate over time. This is especially true when electricity costs are high at certain facilities.
However, when the newest machines are bought at an early stage within that cycle and at reasonable prices, these miners not only produce high returns of 10% a month and more, but also generate returns in Bitcoin, having the potential to rise multiplicatively with increasing market price. Ultimately, the ROI can be reduced to only 6-8 months.
The following chart shows that older types of miners (e.g. Antminer S9i) can work very profitable even during market corrections.
The difficulty rises with the number of miners that are online world-wide. The hardware price rises and falls together with the demand for miners, thus with the price of Bitcoin.
Returns can be low preliminarily, which immediately changes by hindsight, when the returns are kept in Bitcoin and their value in USD rises, as it is the case right now with Bitcoin price already being tripled again.
The effect of difficulty on gross returns
At times when Bitcoin price rose sharply (Jan. 2017 – Jan. 2018), the selling of new miners lagged behind. Difficulty rose less and returns got higher.
Only when the elevation of the difficulty level coincides with a drop in Bitcoin price, the returns decrease as well, as it was the case between April and October 2018.
When a certain minimum return was reached, many miners with high electricity costs were forced to switch off their equipment, resulting in lower difficulty and returns not dropping any more (Oct. 2018 – Jan. 2019).
The graph below shows difficulty levels over the last year.
When the market price for Bitcoin recovered from its low, even in the initial stage returns doubled (Jan. 2019 – April 2019) with the potential for much more to come.
The effect of new equipment
Although the returns of older miners also become attractive in a new upward cycle, technical developments provide an even greater opportunity for early investors.
Mining is a cyclical business. It is important to buy new machinery in the early stages of a new cycle to ensure high returns throughout the cycle. Towards the end of the cycle mined coins should be partly changed into fiat currency.
When next steps in technical development are close, it can be beneficial to reduce the acquisition of miners for 2 to 3 months, to avoid buying too much equipment not being state of the art any more. However, you should not be too conservative to buy to not miss early opportunities.
A rising Bitcoin price usually increases the returns drastically.
The difficulty indicates how much new mining capacity is being installed. It usually develops in parallel to the Bitcoin price but can change towards the end of a cycle.
Beware of steeply rising prices which can be a sign that too many machines are being bought.
As the electricity price is the main constant cost, cheap electricity is vital for constantly achieving high returns.
Wachsende Werte (WW) is committed to become the best in mining. We strive to grow values for our partners by seizing the manifold opportunities of the fast developing blockchain market.
WW was established in 2016, selling and installing mining equipment by
using the expertise of different experts and building up its own know how. Since then, we not only focus on the development of FPGA mining and our own bitstreams, but also do lots of research in cooperation with universities and hardware companies to assure the best mining performance for our customers.
Recently, we started a subsidiary in Montenegro in order to develop our
own exchange and payment system. Those services are made accessible to the fast growing south European market.
To maintain the market pace we are currently developing a data mining concept to even broaden the mining offer for our customers. Besides that, we also plan to start another subsidiary in Switzerland for further enlargement of our business.
WW benefits from the experience of one among very few mining companies that survived the intermediate crash in Bitcoin price and succeeded to restructure and advance in a very difficult mining environment.
We permanently evaluate the market, the mining industry and new business opportunities within the crypto world. On top, we have a special focus on cost-effective research and development.
WW runs it’s equipment at one of the lowest costs of electricity among the market and can provide superior returns on investment.
For further information, please get in contact with
Head of Sales Management Switzerland, Principal Customer Consultant
Wachsende Werte Ltd. | Fusterli 1 | 6044 Udligenswil www.wachsendewerte.at | email@example.com | M: +41 78 710 12 73