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The motivation behind cryptocurrency mining
Of course it's the money. Cryptocurrency mining is the process of verifying transactions on a proof-of-work blockchain network, such as Bitcoin or Ethereum Classic.
Miners play a vital role in maintaining the network and in return are rewarded with freshly minted coins.
Mining started in In 2009, Satoshi Nakamoto, the creator of Bitcoin, produced the first block using a standard computer. At the time, it was a cool activity accessible to tech-savvy hobbyists. Today, it has evolved into a global industry dominated by specialized hardware, sprawling data centers, and professional operations as well as casual enthusiasts.
At its heart, mining is driven by the principle of supply and demand. When demand for a cryptocurrency is high and the number of active miners is low, rewards become more attractive.
But as more miners join the network, competition will intensify. This raises mining problems, requires more advanced (and expensive) hardware, and increases power consumption – often reducing profit margins.
This creates a delicate balancing act where mining remains “profitable enough” to keep participants engaged.
This idea can be illustrated using a supply and demand graph, where the entry of new miners results in a lower income across the board. Note that the values are representative and do not correspond to real-world figures.
Did you know this? Some people choose to mine cryptocurrency out of technological curiosity. After all, mining provides a hands-on way to learn about blockchain technology and decentralized networks.
Factors affecting the profitability of cryptocurrency mining
In reality, there is no such thing as a “coin that is too profitable for me”. Volatility, energy costs, hardware developments, mining reward halvings and regulations contribute to rapidly changing profits. The profitability of mining a coin like Ethereum Classic can quickly overtake Bitcoin, and vice versa.
Let's examine the main factors that affect the profitability of mining in the crypto market.
Flexibility
Cryptocurrencies are known for their significant price volatility. For example, in November 2022, the 10-day volatility of Bitcoin (BTC) exceeded 100%, indicating significant short-term price volatility. Mining profits can be so low that even successful operations struggle to remain viable during periods of high depreciation.
Conversely, price inflation may encourage more miners to join the network, increasing mining difficulty and competition.
For example, in January 2024, Caspa was reported to be producing 9.2 terahasshes per second (TH/s) of KHeavyHash hash power and yielding roughly $69, suddenly making it one of the most popular coins among miners.
Energy costs
Electricity costs are the biggest ongoing costs for miners, and coins with high energy demand are only profitable in areas with cheap or renewable energy.
Bitcoin mining requires an incredible amount of energy due to its difficulty, making it difficult to survive in regions with high energy costs. On the other hand, Ethereum Classic, Monero and Ravencoin, with their more energy-efficient algorithms, are better options for miners in areas with expensive electricity.
Did you know this? Countries like Iran have become Bitcoin mining hotbeds due to their low electricity costs.
Hardware efficiency
The type of mining hardware plays an important role in determining profitability. Bitcoin mining is dominated by ACCs, which, while efficient, are costly and inaccessible to large-scale operations. Aspects such as efficient cooling systems and housing units must also be considered, as they directly affect hardware performance and profitability.
Ethereum Classic (ETC) and Ravencoin (RVN), on the other hand, can be mined with GPUs, which is affordable and versatile.
control environment
Countries regulate cryptocurrency mining in different ways, with some introducing supportive policies while others impose strict restrictions.
For example, under the incoming administration of President Donald Trump, the US has taken a more crypto-friendly stance. The administration aims to position the US as a global leader in Bitcoin mining by offering incentives such as tax breaks and access to affordable energy resources. This approach is designed to strengthen the domestic crypto industry while ensuring financial stability and security.
On the contrary, Russia has taken a more restrictive approach. Starting January 1, 2025, the Russian government banned cryptocurrency mining in 10 regions, a ban that will last until March 15, 2031. This decision is intended to prevent energy shortages and reduce the environmental impact of intensive mining activities.
Is Bitcoin Mining Worth It in 2025?
Not this time, but maybe it will change soon. As of January 2025, there are true echoes of the Bitcoin halving event of 2024, which reduced block rewards from 6.25 BTC to 3.125 BTC.
This reduction in rewards, combined with the depressed mining market, has increased the cost of producing one bitcoin to $106,000, which is about $102,175 below the price.
As a result, miners are facing tighter profit margins, leading to strategies such as hoarding coins to avoid profit squeeze.
To maintain profitability, miners are focusing on operational efficiency, investing in advanced hardware and seeking regions with lower energy costs. Additionally, some are diversifying by leasing data center capacity to AI companies, generating alternative revenue streams for existing infrastructure.
Is altcoin mining still worth it in 2025?
Yes, but that, too, could change. Altcoin mining will remain a viable option in 2025, providing opportunities for profit, especially for miners looking for an alternative to Bitcoin. Cryptocurrencies like Ethereum Classic (ETC) and Monero (XMR) are among my top altcoins.
Ethereum Classic (ETC)
Ethereum Classic, not to be confused with the post-merger Ethereum mainnet, which operates on proof-of-stake (PoS), offers miners the opportunity to earn a reward of 2.56 ETC. Mining Ethereum Classic is considered more accessible compared to Bitcoin because it can be mined with more readily available and less expensive GPUs.
In addition, ETC has a low mining difficulty and a small network hashrate, which means that individual miners face less competition and are more likely to earn rewards with less powerful hardware.
However, how much you do depends on your hardware, electricity costs and how efficiently you run your setup. Tools like WhatToMine can help you identify potential gains based on your specific gear and energy rates.
Monero (XMR)
Monero's RandomX algorithm makes things accessible by favoring CPU mining instead of expensive ASICs. It is a solid choice for small miners or beginners. Revenue depends on hardware efficiency, power consumption and market trends. Use a mining calculator like CoinWarz to see how your setup stacks up and make adjustments to stay competitive.
However, staying informed about market trends and technological developments is critical to maximizing profitability when it comes to altcoins, which are typically more volatile than bitcoin.
Pool, cloud mining or solo mining: which is better now?
In the year In 2025, cryptocurrency miners will have to choose between three main methods: solo mining, pool mining, and cloud mining. Each approach has different advantages and disadvantages that are influenced by factors such as hardware investment, technical know-how, and desired income stability.
Sole mining
Solo mining is when an individual uses their own hardware without joining a group of miners.
Advantages:
Autonomy: Solo miners are in complete control of their operations, not sharing rewards. No Fees: There is no obligation to pay pool fees, which can increase gross income.
Disadvantages:
High Variability: Earnings can be unpredictable, with longer periods without rewards, making it ideal for those looking for consistent income. Resource intensive: Requires significant computing power and labor, often requiring a significant upfront investment in hardware.
Pool mining
Pool mining involves joining a team of miners who combine their mathematical powers to quickly unearth minerals. Rewards are shared among members.
Advantages:
Consistent Rewards: By pooling resources, miners receive more regular payments, reducing income volatility. Low barrier to entry: Allows participation with low power hardware, making it accessible to many miners.
Disadvantages:
Fees: Pools typically charge fees, which can reduce individual income. Centralization Concerns: Large pools contribute to network centralization, which can affect the ethics of decentralized cryptocurrencies.
Cloud mining
Cloud mining allows users to rent mining power from a service provider instead of owning hardware.
Advantages:
No Hardware Required: Eliminates the need for personal mining equipment, reducing initial setup costs and maintenance responsibilities. Accessibility: Allows individuals to participate in mining without technical expertise or significant capital investment.
Disadvantages:
Potential scams: The industry has seen scam platforms; It is important to do thorough research before committing to a service Low Profit Margins: After service fees and contract costs, profits can be modest compared to direct mining operations.
Did you know this? In the year In 2018, Kodak Cashminer was launched as a Bitcoin miner at the Consumer Electronics Show (CES). Promoted by Spotlight USA, it offers customers the opportunity to lease the mining rig for around $3,400 down payment, promising high monthly returns over two years. However, the plan has been heavily criticized and labeled a “fraud” for its unrealistic profit projections and lack of transparency. Kodak later clarified that Cashminer had not been officially licensed, and the project was eventually shelved.
For most miners, pool mining strikes the best balance between effort, risk and reward. However, the best approach ultimately depends on individual circumstances, so it is important to evaluate your situation and thoroughly research each option.
Future trends in cryptocurrency mining
Cryptocurrency mining is an industry in constant flux, driven by technological advancements, environmental priorities, and changing market dynamics.
Technological innovations contain a list of discussion points. Quantum computing, for example, has become a hot topic with Google's quantum chip, Willow, making major breakthroughs. Quantum computers have the potential to disrupt and transform the crypto industry.
Meanwhile, companies like Nvidia have promised to lower operating costs and increase mining productivity by developing advanced GPUs that improve energy efficiency and performance.
Sustainability is another important focus for the future of mining. More than 50% of mining operations now use renewable energy, a trend that is growing as the industry prioritizes green practices. In addition, new energy-efficient consensus mechanisms such as proof-of-stake (PoS) are gaining interest as they aim to reduce the environmental footprint of traditional mining methods.
Market volatility also plays an important role in shaping mining profitability. Mining profits depend on supply and demand. High demand and fewer miners will generate better income, while low demand or increased competition can squeeze profit margins.
Fortunately, global crypto adoption continues to grow, with an estimated compound annual growth rate (CAGR) of 12.5% through 2030, indicating a steady increase in demand for digital assets.
Regulations are a double-edged sword for miners. In some states, stricter policies on energy use and emissions are pushing mining activity elsewhere. However, areas with renewable energy and mining-friendly laws are becoming prosperous centers.
Regulatory frameworks like Crypto-Assets (MiCA) can build institutional trust in crypto, which can attract more large investors and strengthen the market. In this way, well-designed regulations can benefit cryptocurrency mining.
The bottom line is, as long as miners are willing to put in the effort and stay tuned, cryptocurrency mining can still be a profitable business in 2025.
