How Profitable Is Bitcoin Mining Hardware In 2018?
The initial years of Bitcoin mining were really akin to a gold rush. Perhaps it was the little publicity or people not knowing its potential future value that made relatively few people try it.
Bitcoin mining refers to the process of verifying transactions or payments carried out between users on a decentralized network. Besides, it is a means of introducing new coins to the network and keeping miners motivated.
At the moment, Bitcoin is really hot. Despite the upheaval early this year, it is still thousands of times more valuable than it was in 2009. The early bunch of crypto enthusiasts and cyberpunks who went all in early are mostly fabulously wealthy now.
The undeniable fact is that with the exponential rise in value, mining has become a whole lot more difficult. It is impossible to mine profitably using simple hardware like your home PC.
Therefore the all-important question is this: Is Bitcoin mining still a viable endeavor?
Let’s have a look at some of the factors affecting profits:
Block Rewards and Mining Difficulty
Mining difficulty is influenced by the computing power of the network and coincides with the preferred network block time. This difficulty of the blockchain adjusts every 2,016 blocks contingent on how long it took to find the previous 2,016 blocks.
For now, block rewards halve every 210,000 blocks. This is approximately every four years. As such the block reward in 2009 was 50 coins but has reduced to 12.5 coins now. The precise moment when halving will occur is shown by the Bitcoin clock.
It is important to also highlight the subject of hashing. A hash essentially means function used to map data obtained from complex mathematical calculations. The difficulty of finding a hash below a given target is the Bitcoin network difficulty measure. This difficulty changes every 2016 blocks as mentioned. This means that Bitcoin mining will continue to get harder and harder as time goes along.
One can’t really talk of the complexities of mining without raising power costs. This is because the Proof-of-Work computations need large amounts of processing power. This makes electricity consumption correspondingly high.
The end result is high power costs not only to power your hardware but also for cooling. This can mean a large chunk of your profits can be eaten up to the extent you go into negative territory. As a result it is only feasible to use high capacity, specialized mining equipment. Anything else will leave you frustrated and possibly incurring losses.
The most profitable mining operations require lost cost or even renewable energy. For instance mining has really caught on in Iceland with has natural cool air in addition to the former two. The specialized mining equipment such as the ASIC miners generates enough coin to offset the power costs.
Bitcoin Mining Hardware
From the above, it is clear that to reap decently from Bitcoin, you better be prepared to make serious investment.
ASIC Mining Rigs
The best option is the ASIC (Application Specific Integrated Chip) mining rigs. They are the most efficient but a little pricey as well. One should set you back about $2000 while the best performing ones can go for up to $5,000.
GPU Mining Rigs
Though not as good as ASIC rigs, GPU (Graphic Processing Unit) mining rigs offer a cheaper alternative. That said, you can still get decent results using one. One advantage over ASIC rigs is that you can mine multiple cryptocurrencies. This is because they are not programmed to any hash is particular. GPU rigs therefore offer better flexibility as you can adjust your coin mining to profitability of each coin.
Mining pools and cloud mining sites are also a risky endeavor. This is because it is difficult to ascertain the credibility of such platforms and some have turned out to be rip-offs. To control your mining destiny better, make the investment you can control.
There also exist mining pools such as Minergate. These combine the processing power of all users and result in a mega mining operation. Block rewards are distributed based on contribution. However, this is not as lucrative as the first two for equal amount of resources.
This is a fee paid every time BTC is sent through the blockchain.The fees are important because it gives miners incentive to remain on the network. The large hash rate they generate is important for keeping the network secure. Once all the 21 million mineable BTC is exhausted it will be the primary source of revenue for miners.
Our Final Thoughts
In summary, you have to make it a serious priority to obtain great results from mining. For those seeking to make forays in the sector, the time to do it is really now. Mining will continue to get more difficult as well as less profitable moving forward. My parting shot would be to make hay while the sun still shines.