Mining machines that were bought at the peak of bitcoin’s bull market in late 2018 are now turning a profit again as the digital currency surges to new highs.
Bitcoin has more than doubled in price since the start of 2019 and has recovered from a sharp correction that occurred during February.
The cryptocurrency has gained more than 80% since hitting its lowest level in December 2018 — a drop that came after a crackdown on cryptocurrencies by regulators in China and South Korea.
Mining machines designed to solve complex mathematical problems in order to generate new units of bitcoin have become less profitable since the cryptocurrency’s sharp decline, according to data provided by Coin Dance, an online platform that tracks global cryptocurrency activity.
As the price of bitcoin continues to rise, mining is becoming profitable again.
“The whole mining landscape has changed,” said Garrick Hileman, head of research at Blockchain and co-founder of Mosaic.io. “This year it’s been a return to profitability for most miners.”
The price of bitcoin rose more than 50% in the last four months, from $6,200 in April to $9,900 today. It’s up more than 100% since January 2018, when it was below $4,000. The price has climbed steadily over the past two years despite several major crashes along the way.
Bitcoin mining is a process by which new bitcoins are created and awarded to miners who verify transactions on the blockchain network by solving complex mathematical puzzles with computers. Miners are rewarded for their efforts with additional bitcoins — known as block rewards — that are released into circulation every 10 minutes or so until all 21 million bitcoins have been mined (expected sometime in 2140).
This system is designed to encourage miners to participate in verifying transactions over time so that there is always enough computing power available to process them quickly and keep the network secure against attacks or spam transactions.
The value of bitcoin dropped below $3,000 between January and February before recovering to around $4,000 today. The digital currency traded just above $1,000 at the start of last year when it was still seen as an alternative investment due to its wild price swings and volatility.