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Mining cryptocurrencies, especially Ethereum (ETH), using a graphics processing unit (GPU) has been confirmed to yield little to no gain. This is according to a new report by CNBC on the 13th of November.
The slump in cryptocurrency mining is a resultant effect of the drastic fall in the price of Bitcoin in 2018. According to some estimates, Bitcoin also dropped to a point where it was not profitable to mine it anymore. Mining of Bitcoin or other altcoins such as Ethereum refers to a method through which a certain kind of blockchain rewards participants to maintain it by paying miners in coins generated from the blockchain. These cryptocurrencies are created through an energy-intensive process otherwise known as mining which utilities high computing power to solve complex mathematical equations. If the cost of producing these digital coins exceeds the reward, miners run at a loss. Also, mining equipment needs to be replaced regularly. This accounts for more than half the cost of mining.
There has been a decrease in profits from the mining of digital coins because of the protracted slump in crypto markets and declining network hashrates. According to an analysis by Susquehanna, the profit per month for mining Ethereum using GPU-based setups is now $0, down from almost $150 in July 2017. The analysis blames it on the fall in the price of Ethereum. Ethereum is currently trading at around $200, down from $1,350 in mid-January 2018.
Another issue is the declining hashrate of Ethereum. A lower hashrate translates to reduced opportunities for Ethereum miners to win block reward. Ethereum’s hashrate fell substantially in 2018.
The non-profitability of mining Ethereum is not just felt by miners, Nvidia, the maker of GPU is also affected. Nvidia has experienced a steady decline in sales as miners are no longer actively using GPU for cryptocurrency mining. CNBC reported that the chipmaker Nvidia’s revenue from the sale of GPU is down to $100 million and there is no sign that it will increase by the next quarter’s report.
Nvidia profited tremendously from the cryptocurrency boom late last year. This is because most miners relied on their graphics cards to mine cryptocurrency as it was a lucrative business at the time with the price of Bitcoin rising to about $20,000 last year and Ethereum rising by over 8,000 percent.
In addition to Ethereum mining losing its profitability, Bitcoin’s hashrate has plummeted this week. This is actually not a surprise as the hashrate of Bitcoin has plateaued for weeks. Earlier this year, Bitcoin had 61 exahashes per second, which is a record it set in August. Since then, it has dropped by 30% to 43 exahashes.
Cryptocurrency prices are going down. Bitcoin is now at its lowest price since October 2017 and other cryptocurrencies are also suffering a similar fate.