How to increase mining hashrate? Hashrate is the computing power of mining equipment. The higher your mining farm hashrate, the higher mining rewards you can receive. Having once taken up mining and earned the first Bitcoins, it is difficult to imagine that you can do anything else, so for this reason as well as for many other, more fundamental ones, mining today is a long-term investment with a horizon of at least 6-10 years.
The market disposition is such that you reach break-even at peaks after the nearest halving and consolidate your success 4 years later. Whatever critics of Bitcoin and the crypto industry say, the cyclical development of the first cryptocurrency is embedded in the motivation system itself - both for miners and for whales, so there is no point in coming up with any other strategies than to create an effective mining infrastructure with an eye to the next 10 years.
What is hashrate?
Hashrate is the production capacity of a Bitcoin mining plant, so from a manager's (not just an enthusiast’s) viewpoint, hashrate should constantly grow, while the costs decrease. The main expense item for a mining plant is electricity. The more efficient the mining equipment is in terms of energy consumption, the lower the operating costs and the cost of each Bitcoin mined.
In the current conditions, Bitcoin mining for the sake of the process and a vague hope for a rise in the BTC exchange rate will quickly lead to a loss of profitability and equipment shutdown. That is why it’s very important to have two priorities (hashrate/costs), and not focus on one thing, such as increasing the hashrate at any cost. Not all hashrate is good - only that which can pay off. It comes down to the eternal manufacturer’s dilemma - the balance of capital and operating costs.
Which factors affect the hashrate?
Let's use the Hashrateindex service and see how capex and opex are interconnected in terms of mining hardware investments. Without diving into specific figures, it is obvious and natural that the more efficient the miner, the more expensive it is, but the lower its operational costs.
The computing equipment’s capabilities are constantly growing - relatively recently, there was no diagram for miners with the energy efficiency of 25 kW/TH (J/TH).
Today (at the beginning of Q22023) at a price of $0.06/kW, the margin of profitability, as you see from the table below, is around the energy efficiency value of 50 kW/TH. Mining hardware with the e/e of 55 kW/TH or higher (highlighted in red) causes daily losses and must be switched off. Of course, profitability is affected not only by the e/e, but also by the Bitcoin exchange rate, which is why you shouldn’t rely on market gifts in this business - rather, take every measure to survive in the most unfavorable conditions.
Miners with 50 kW and above can no longer survive at a price of $0.06/kW, whereas just a year ago they could be considered quite successful. We also need to take into account the continuous increase in the Bitcoin network difficulty, which is instigated by major players. This trend can continue indefinitely. And although it leads to an imminent crisis and hashrate collapse, not everyone will be able to survive up to that moment.
How to increase your hashrate
So, what is the optimal solution? How to increase hashrate correctly? The nearest halving inspires hope in BTC exchange rate growth, but at the same time does not exclude hard drawdowns while the market adapts to new realities. The capex/opex chart will shift to the right and in a year, or maybe even earlier, a diagram of 15 kW/TH will appear there. Thus, equipment with the e/e of about 40 kW/TH risks becoming unprofitable. To have an adequate safety margin, it is advisable to stay within these forty and have access to electricity at a price below $0.06/kW. On the other hand, in pursuit of equipment that’s too productive, you may inflate capex, so that payback will be a big question.
In order to calculate your mining farm, you need to create your own profitability benchmark, in other words, draw a “price/energy efficiency” line that you do not cross when buying miners. This way you will limit the capex. At the same time, there should be another line - "energy efficiency/rate," where the rate is your personal understanding of the average Bitcoin exchange rate for the entire payback period of the equipment being considered for purchase.
In short, you create criteria by which you buy miners based on your own views, because no books or analytics will help you to do it more or less objectively. Do it yourself! At least your mistakes will be your mistakes, and your success will be your success. You should trust yourself and rely on the only constant - the electricity cost (which can also grow over time). Not so bad for the initial conditions!
The importance of hashrate
Over the past year, the Bitcoin network hashrate has almost doubled, which means a respective decrease in mining profitability. What is happening is explained by the unrestrained race of large mining companies for mining power. A small player can stop, scratch his head and think “do I need this?”, but a large company, especially a public one, whose shares are traded on any stock exchange, has no such choice.
Large mining companies are heavily leveraged and constantly take risks. On the one hand, they need to continue to increase mining hashrate in order to increase gross revenue, on the other - when the market falls, they are forced to sell Bitcoins at unprofitable prices to cover operating costs, and thereby put even more pressure on its rate.
Obviously, this cannot go on forever, so today we are on the threshold of certain market movements that will result in the creation of a new reality, where mining profitability will have to be assessed anew. In the meantime, we are in the old reality, and all we can do is create a safety margin without creating new problems.
Conclusions
Bitcoin mining is an exciting activity, which in many ways is no longer available to small players. However, with sufficient resources, everyone can create their own financial model of mining, using a service like the Hashrateindex, develop such criteria for buying mining hardware that it retains profitability for as long as possible, but at the same time does not send capex through the roof.
How to increase your hashrate? In order to be successful in mining, you need to have your own vision for the next 6-10 years and adjust it as the market situation develops. In today’s mining, the task of survival prevails over the task of obtaining super profits - simply because this market can no longer be considered young, which means that the fight for your existence and the right to earn is likely to prevail over prosperity.
How to increase hashrate? FAQ
What makes hashrate higher?
In order to increase the hashrate of a mining farm, you need to buy additional miners. However, to ensure the long-term profitability of this equipment, control the ratio of the miner price and its energy efficiency, you need to maintain a balance between capital and operating costs. And in addition, set the energy efficiency threshold, since cheap inefficient equipment may become uncompetitive in a year or two.
What is the highest hashrate?
Today, one of the most advanced miners is the Antminer S19 XP Hyd model with the hashrate of 250-255 TH/s and energy consumption of 5200-5304 W, i.e., its energy efficiency is about 21 kW/TH, which is very good in the current conditions, however, the model price is quite high. In order for your mining farm to be profitable for as long as possible, you need to select equipment thoughtfully, maintaining a balance of capital and operating costs.
What determines hashrate?
Hashrate determines your ability to receive gross revenue. However, capital and operating costs are on the other side of the scale. You can use the best mining hardware and mine a lot of Bitcoins, but the payoff may still take a long time. Set the criteria for mining hardware buying for a clear guideline on the payback period in the current conditions.
Does higher hashrate mean more profit?
A higher hashrate means a higher gross revenue, but does not mean a net profit. When you invest in a mining farm, you need to understand at what point your investments will pay off, otherwise mining risks becoming a process for the sake of the process. Set miner-buying criteria in order to maintain a balance of capex and opex.
