When cryptocurrency rates drop, a large number of asics and graphics cards enter the secondary market. Some users sell fully assembled farms for coin mining. During cryptozyme, the fear and greed index tends to zero (the “extreme fear” zone). However, not all miners go out of business because of declining rates. Sellers may have other reasons – upgrades, personal circumstances. Experienced market participants continue mining as long as they manage to earn at least to pay for electricity. In the article we will tell you why sell mining farms, if it is profitable. Buying used equipment can be a profitable investment.
The main reasons for selling mining farms
In the period of excitement in the cryptocurrency market, prices for equipment grow in parallel with the exchange rates of coins. The payback period of a video card is about a year, asics – 6-8 months. At such a time, miners who started the business earlier decide to go out at the peak and invest in another business.
Some users entered the market in 2019-2020 to make money for an apartment or house. In 2021, asics and GPUs went up 2-3 times in price. The money gained from the sale of hardware was enough to pay off a mortgage loan by 80-100%.
During the correction, the number of beginners disappointed in mining grows, who have not had time to pay off the equipment and stopped believing that it is still possible. In a falling market, the supply of used equipment at a good discount increases.
Turnover of invested funds
In the calculation of the payback of mining, the sale of equipment on the secondary market with a discount of up to 30-40% is included. Usually, equipment that has served a certain period of time is put up for auction. For asics it is 6-12 months, for video cards – 1-2 years. This is how farm owners reduce the payback period of the equipment.
The proceeds can be used to buy new energy-efficient models. This allows you to maintain sufficient computing power of the farm with minimal costs in conditions of ever-increasing complexity of networks.
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Relocation and personal circumstances
A change in living conditions, the birth of children, quarrels in the family because of the noise from rigging with machinery are good reasons to sell a farm. Some users are forced by circumstances to stop working, others decide to engage in cloud mining. In the summer of 2022, it is possible to earn up to 70% of the investment per year on remote servers.
At the peak of the hype, many miners bought equipment on credit. The growing market allowed to pay off the loan in 6-12 months. However, due to the decline in exchange rates, users found themselves unable to pay for electricity, hosting and make monthly payments to the bank. In such a situation, it made sense to stop production and sell the equipment to pay back the loan.
Change of activity
People do not always adequately assess the prospects of business and their capabilities. Often miners start working without a carefully drawn up business plan, taking into account potential risks. As a result, cryptocurrency mining brings less income than expected.
In 2020-2021, it was possible to pay off a farm of 2-3 asics within a year. In 2022, the situation has changed. As of August, the payback of 3 powerful ASICs is 1.8-2.5 years. Investors are moving money into safer and more efficient businesses.
Poor market conditions
Mining profitability is highly dependent on cryptocurrency prices. In November 2021, Bitcoin set an all-time high at $69k. Owners of 1-2 powerful ASICs earned $1-3k.
By August 2022, the price of the main cryptocurrency fell by more than 65%. At the same time, the complexity of mining continues to grow. Over the year, asics have fallen in price by 1.5-2 times. Experienced miners use this opportunity to increase capacity. Newcomers, who bought equipment at the top of the market, suffer losses.
Analysts give disappointing forecasts regarding the BTC rate. Michael Burry, who predicted the stock market crash in 2008, expects prices to drop by at least 50% more and the bearish trend to last until 2023-2025. Such prospects encourage miners to sell their equipment in order to recover at least part of the invested funds. Experienced participants continue mining as long as the profit covers electricity bills, with the expectation that quotes will recover. However, this requires another source of income and sufficient reserves. Not all beginners have such opportunities.
The need for an upgrade
The complexity of top cryptocurrency networks is constantly increasing. To maintain profitability, miners are forced to increase capacity, replacing outdated equipment with more powerful ones.
In 2024, many data centers place only the latest models of asics. Farm owners sell used devices before they have used up their resources. The money is used to buy modern equipment. This tactic allows you to reduce the payback period of the equipment by 2-3 times.
You can reconfigure the technique to extract a different coin. Most often this is done by beginners who work at home. Large entrepreneurs prefer to mine top coins, some miners recognize only bitcoin. In August 2022, the complexity of the network of the main cryptocurrency is 28.17 T. It is possible to mine the coin only on powerful modern asics.
| ASIC | Hashrate (Th/s) | Price in August 2022 (rub.) |
|---|---|---|
Is it worth buying a used farm
For mining cryptocurrencies, GPUs and ASICs are used. In mining, the equipment works in a round-the-clock mode at peak loads. If the mode of operation is violated, the technique can prematurely fail. Therefore, buying miners on the secondary market is risky.
To protect yourself, you need to focus on the average market price, carefully filter the ads of sellers, test the technique. The pros of such a deal:
- You do not need to wait for the delivery of components, spend time on assembling and customizing the equipment.
- Used mining farms are sold at a discount of up to 50%.
Summary
Miners have many reasons for selling equipment. It is not always due to a drop in profitability. Many are forced to close the business for personal reasons – urgent need for money, moving. Some users became disillusioned with mining, succumbing to negative sentiment during the cryptozyme of 2022.
Buying machinery on the secondary market can be a good investment. But you need to carefully select ads and check asics (video cards) before the transaction. Experienced miners use the situation to purchase cheap capacity in the expectation of future growth.
However, the forecasts of experts are mixed. In June 2022, the Coinbase exchange reduced its staff by 18% (1,100 people). The head of the company Brian Armstrong is convinced: due to the economic recession, the bear market will drag on for at least 2-3 years. Bloomberg analyst Mike McGlone, on the contrary, believes that the price of Bitcoin will recover by the end of 2022 and even reach $125 thousand. Therefore, the current low prices for cards and asics are a good chance to enter a promising business.
Frequently Asked Questions
❗ What are the risks of buying a used farm?
The real hash rate may be lower than the declared one, detected malfunctions will have to be eliminated at your own expense. To avoid this, you need to test the equipment before the deal.
💻 Why do owners of mining farms sell equipment?
The reasons can be different – a decrease in cryptocurrency rates, updating the farm, moving. Some miners bought asics on credit, so they are forced to sell equipment that does not bring income.
✅ What are the advantages of buying a ready-made used set of asics?
You do not need to spend time searching for and assembling parts. You can start mining right away. The price of a used farm is 30-50% lower than a new one. This will allow you to recoup your investment faster.
❓ How much does a used farm cost?
Due to the fall in coin rates, the prices of mining equipment have fallen. In the summer of 2022, a new farm of 2-5 ASIC or 12-50 GPU can be bought for 180-500 thousand rubles. On the secondary market the equipment is offered at a discount of 30-50%.
💲 How much can you earn from cryptocurrency mining in 2022?
Due to the decline in quotations, the income has decreased. In August 2022, miners on 2 powerful asics earn $100-400 per month.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
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