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| Two technicians inspect bitcoin mining at Bitfarms in Saint Hyacinthe, Quebec, in this file photo taken on March 19 (AFP Photo/Lars Hagberg) |
London
(AFP) - Surrounded by the cryptocurrency mining "rig" that is taking
over his bedroom, "Ali" lays bare the risks of his trade, revealing
his profits "are a tenth of what they were".
Prices of
cryptocurrencies have plunged since the heady heights of last year, slashing
the profits of miners such as Ali.
"This
is the worst possible time to invest," the young Lyon native, who
preferred to keep his name secret, told AFP.
Ali still
ekes out a profit and has amassed enough reserves to absorb around six months
of losses, but the days of generating 15,000 euros (£13,580; $17,450) profit
per computer seem long gone.
He acquired
his first rig, an assembly of six graphics cards, in January 2017, and was just
about to buy his seventh.
This
investment totalled around 13,000 euros, soon paid off with his initial gains.
But the
cryptocurrency boom at the end of 2017, of which Bitcoin was the best-known
example, has multiplied the number of miners.
Many
virtual currencies require that machines are connected to the network and
miners are rewarded with units of currency when they create a new block,
achieved by solving complicated mathematical problems.
However,
the more units are mined, the more the currency is devalued.
'Not
fair!'
"We
were of course very uneasy about seeing our customers not getting what they
expected," recently admitted Genesis Mining, a company that rents
computing power.
It blamed
the "downward trend" of prices and the "heavily rising
difficulty" of mining since April.
The
collapse of Bitcoin, which has lost two-thirds of its value since December and
dragged many more cryptocurrencies in its wake, has not discouraged miners.
On the
contrary, the power dedicated to Bitcoin mining has more than tripled since its
peak prices, and the trend shows no sign of abating, according to the
bitinfocharts site.
A
"farm" consisting of more than 3,000 mining units was inaugurated in
Russia last week, cutting profitability even further.
In
mid-December, the reference unit for computing power, the THash/second,
permitted the equivalent of $3.84 to be mined in one day, compared to only 25
cents today.
As a
result, Genesis Mining offered its customers newer equipment to rent at a
reduced price, halving maintenance costs, but the proposal was not greeted
warmly.
"This
is not fair! Your early customers helped you get to where you are now. Give us
a free upgrade, we deserve it and you know it," tweeted one customer.
Electricity burden
Mining can
also be expensive due to the huge amount of electricity required to earn units.
For
example, the Antminer S9 -- a mining device dedicated to Bitcoin -- is worth
more than 600 euros and consumes 1,600 euros of electricity per year.
Individuals,
who generally focus on other virtual currencies that are easier to mine than
Bitcoin, tend to rely on graphic cards to do the heavy lifting, which are less
power hungry.
Those who
get special rates on their electricity bills, such as EDF employee Philippe
Vanbaelinghem, a miner for almost a year, can therefore exploit their
"huge advantage" for monetary gain.
His staff
discount allows him to reduce his bill by 80 euros per month, helping him
generate around 140 euros in monthly mining earnings.
"Not
everyone is equal on this," he admitted, pointing out that he could still
have made a profit on standard tariffs when prices were high, but not now.
As a
tenant, Ali's electricity bill is fixed each month, and he has not received any
complaints from his landlord.
Other costs
include technical faults, maintenance and the hours required to learn how to
optimise equipment, meaning miners have little room to cut costs, despite
market prices.
"As
strong believers in the industry and its potential, we are certain the market
will soon recover," said Genesis Mining.
Ali and
Philippe are among the many miners who have incorporated speculation into their
business model, hoarding some of their mined cryptocash.
Ali hopes
to stop mining in four or five years.
With
cryptos, "you have to expect everything," said 25-year-old.
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