Author: Jonathan Toomim 2016-02-07 17:56:48
Published on: 2016-02-07T17:56:48+00:00
In response to a statement about miners only seeking profit, an email points out that miners aim to optimize both short and long-term ROI. Some miners may even mine at a loss if it benefits the network and provides long-term ROI. After the 2012 halving, revenue dropped by approximately 50%, but profitability did not become negative. The hashrate decreased by less than 10% because electricity costs were cheaper than the reduced revenue. It is a misconception that mining hashrate increases until an equilibrium is reached where no one is making a profit. The hashrate stops increasing when expected operating profits stop being greater than hardware cost. For instance, an S7 would be purchased if expected operating profit over the next year or two exceeds its $1000 cost. Before the halving, an S7 earns around $190/month and costs $60/month to operate, giving a $120/month profit. Following the halving, revenue would drop to $95/month, leading to a profit of around $35/month. Knowing the halving dates in advance means that miners can avoid purchasing hardware that won't earn a 100% return on investment.
Updated on: 2023-06-11T03:43:08.241604+00:00