The financial industry was rocked in 2009 when a user (or users) with an alias of Satoshi Nakamoto introduced Bitcoin to the world. The cryptocurrency, Bitcoin, is a digital currency that can be used as a global payment system. It was the first of its kind to work without an administrator or central bank - transactions are peer-to-peer, and are verified through a blockchain.But you’re not here for a history lesson, this piece is meant to help you further understand the complex world of bitcoin mining, how to mine bitcoin at home and the kind of mining rig you’d need, and if mining bitcoin is worth it in the current cryptocurrency market.
Can I Profit from Bitcoin Mining in 2018? Should I Invest in a Bitcoin Mining Rig?
There are many things to consider to be able to answer that question properly.Here are some factors that can help you determine your potential for profit:
Bitcoin mining rigs use GPUs or video cards similar to what gamers use. The increase in demand for mining-capable GPUs because of the rise of bitcoin miners led to an increase in hardware costs. Today, there are now rigs specifically made for mining. The Antminer S9 being one of the most advanced mining rigs can cost upwards $2100USD, excluding power supply that will cost around $170-$200USD.
Every mining computer’s aim is to solve a mathematical problem. That problem is called a hash, and the time it takes to solve problems is your hash rate. Stronger computers or large mining pools have the ability to compute and solve faster - yielding a higher hash rate for its users. It is measured in MH/s, GH/s, and TH/s or Mega hash per second, Giga hash per second, and Terra hash per second, respectively.
This pertains to how complex or hard the mathematical problems are. The bitcoin network is programmed to release a constant number of 10 bitcoins for every ten minutes. This means the difficulty will need to keep up with the hash rate. So if there are more miners, the problems become increasingly difficult, making it harder to mine bitcoins.
A Bitcoin mining rig consumes a lot of energy and produces an equally large amount of heat that requires rapid cooling to prevent any damage to the mining computer. A hotter environment will require more cooling, thus consuming more electricity, making location another important factor in calculating for profit.
Rigs specifically made for bitcoin mining consume an insane amount of energy. The Antminer S9 uses 1,375 watts while the Ebit E10 needs a whopping 1620 watts to function. You can easily search for your current mining rig’s power consumption or use this list.
The cryptocurrency market has matured enough to have witnessed prices crash and bounce back. As bitcoin has recently experienced a 50% dip, potential miners should take into consideration the projected conversion rates. Since you will need to eventually convert your bitcoins to USD or your local currency, the current market prices will heavily impact your profitability.
As bitcoin problems become more and more difficult, more computing power is required. This led to the birth of pool mining where users “pool” their collective computing power to solve more complex problems. Miners who join pools are rewarded based on their output. On top of that, pools usually charge a fee for its participants – another expense that miners need to put into consideration.
At this point, professional bitcoin miners from around the world have heavily invested in mining rigs, settled in locations with cheaper electricity, and colder climates. This advantage makes it a challenge for hobbyist miners to hash enough to reap a profit.
Get some help from a mining calculator
To help give you a better idea of how profitable you can be with the conditions you currently have, use a bitcoin mining calculator.It is worth knowing that there are still bitcoins left to be mined, so mining rigs are not obsolete and have the potential to generate revenue. Variables such as the price of your mining rig, the difficulty of the problems to solve, electricity cost, and pool-mining-cost all affect the time before you hit ROI and begin making a profit.If you are not willing to invest in strong mining rigs, then bitcoin trading rather than bitcoin mining may be a more profitable option for you.
Cloud Mining Bitcoins
A new way of mining bitcoins using “cloud mining” has been quickly gaining popularity. In essence, you hire computing powers from a company with strong hardware and earn bitcoins depending on how much power you have rented. This allows miners to earn bitcoins without buying a physical rig.However, miners must approach cloud mining with utmost care as many cloud mining companies end up costing you more than the cryptocurrency you actually earn. The pros of cloud mining include foregoing loud fans from physical mining rigs and no added electricity costs. The cons include a high risk of fraud and lower profits. If you do want to explore this kind of mining, opt for established companies similar to Genesis Mining who has been around since 2013. Older cloud mining services usually have a better grasp and will most likely have lesser fraud risk than newer, fly-by-night sites. Also, the conversion process is not the same as bitcoin mining with a physical rig. Because you will “purchase” mining power, you may be profitable in the first few months but as the mining difficulty increases, the same mining capacity will earn less and fewer coins until it is costing you more than what you are earning.
Altcoin Mining as an Alternative
Another venture you can go into is mining alternative coins or altcoins. Unlike bitcoin that is now saturated with miners, making mining difficult, many altcoins are mined easily and may be a good place to invest in. Peercoin and Litecoin (LTC) are quite promising with LTC, making a recent upward trend.
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