Crypto Crashed So Hard It May No Longer Be Profitable To Mine Ethereum
If you're thinking about mining Ethereum as a side hustle, you should probably shelve the idea for the time being because, for the most part, it's not currently profitable. There are exceptions (and caveats), but for the average user, it could end up costing more to mine Ethereum in electricity costs alone following a steep decline in cryptocurrency values.
Large scale mining operations situated in places where the owners can siphon electricity at lower-than-average national prices in the US can and are still making money, just perhaps no longer hand-over-fist. But for the Johnny-come-lately who wants to put their GPU to use mining Ethereum, the profit proposition has taken a hit.
The cryptocurrency market is tumbling—after peaking with a combined market cap of more than $2.8 trillion last November, it's now down to less than $945 million, according to CoinMarketCap. The situation is so bad that Celsius, one of the top crypto lending firms, has halted withdrawals much to the dismay of its customers.
"Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations," the firm announced earlier this week.
In addition, major crypto firms including BlockFi, Coinbase, Crypto.com, Gemini Trust Co., and Rain Financial have all announced significant layoffs in the wake of plummeting cryptocurrency values.
Mining Ethereum: High Electricity Costs And Plummeting Values Take Their Toll
A month ago, a single ETH was worth north of $2,100. A week ago it was at around $1,800, and today it's worth around half as much as last month, trading at $1,078 currently, according to Coindesk. Ethereum's value has dropped 12 percent in the past 24 hours, and 70 percent in the past six months. Those are precipitous declines, let along the drop from its all-time high of nearly $4,900. Around this time last year Ethereum showed no signs of slowing down, but it certainly has.
According to Cryptoslate, which posted electricity costs in the New England area, the numbers show that mining Ethereum is no longer profitable for the first time since 2020. We decided to check the math for ourselves and we came to the same conclusion.
On average, electricity prices in the US have increased from 13.30 cents per kWH in 2021 to 14.47 cents in 2022. The exact amount depends on where you live—in New England the average price is 24.50 cents per kWH, while California has the highest cost at 26.71 cents.
We can plug these and other values into Minerstat's Ethereum mining calculator to estimate profits and losses. Let's say you're running a GeForce RTX 3090 and have it tuned to hit a 130 MH/s hash rate at a 320W power consumption level. According to the calculator, you'd be losing a little bit each day.
In this example and at today's ETH value, you'd generate around $1.80 worth of Ethereum per day. Depending on where you live, though, the cost of electricity could be over $2 per day. So it's not a huge loss, and you could argue that if Ethereum rebounds, it will be worth it in the long run. There's also a luck factor at play, that can skew results in either direction.
But speculation aside, it's a losing proposition at this very moment, and that doesn't even factor in the cost of a graphics card (if you're thinking about buying one specifically for mining). And quite frankly, it will be moot once the Ethereum 2.0 merger happens (which keeps getting delayed).