Is Mining Bitcoin A Profitable Venture?

Is Mining Bitcoins A Profitable Venture Now?

bitcoin mining

Since the advent of the leading crypto currency, Bitcoin, many people wonder about the benefits and profitability of this digital currency. Although there are so many miners who gained tremendous profits from this technology and many are still making more than 10 grand a year. The Bitcoin’s success and ability to generate profit for investors and miners made it talk of the town very fast that it inspired other inventors to develop alternative currencies in order to make an addition in the fast-growing trend of digital wallets and currency. Today, there are hundreds of other alternates to Bitcoin, however, Bitcoin still remains the market leader.

How Profit Is Generated From Mining Bitcoin?




The best and easiest way to make long-term profits from Bitcoin is to simply invest your dollars into buying some bitcoins but the most economical way of making profits is to mine them yourself instead of buying them. Mining bitcoins is the process of record-keeping and validating transactions for the Bitcoin network which in return compensate the miners with bitcoins. This is how a miner earn bitcoins. But only earning bitcoins cannot be directly related to making profits because in order to make this venture profitable, the value of the earned bitcoins has to be worth more than the costs of mining them. Back in 2010 and 2011, early miners profited a lot by mining bitcoins on their home computers for the network as there was not a big number of miners competing, low costs of mining and there were no professional mining centers.

Newer Technologies Which Affected Profitability

Unlike the older times, Bitcoin mining is very hard to accomplish on a simple home computer as the establishment of big data mining centers have completely changed the process and took it to the next level. They made the processing faster with massive computing power. Today, a newbie miner needs to invest a lot of money in order to start mining as the first requirement is having a mining rig which costs great amount of money thus profitability is reduced. In addition, the introduction of mining software and application specific integrated circuit chips (ASIC) elevated the performance of mining but increased the overall costs and required a huge learning curve for operating for mid or small level miners.

Bitcoin Mining Profitability

Witnessing the technological progressions, many miners question the profitability of mining bitcoins today. There is no simple answer to this question, although there are factors on which the profitability of mining depends. And there are profitability calculators available to calculate the profitability of any mining setup by simply inputting the information including hash rate, difficulty, electricity costs and hardware costs. The profitability of mining depends on the following factors:

1. The Cost of the Electricity

Firstly, the electricity costs are to be considered as this is the biggest cost a miner has to incur. A mining rig or hardware consumes enormous amount of electricity to power the computer system and run the mining process. If you are in a country where electricity costs are low, your costs will be reduced and you will generate profits. But if majority of your profits are consumed by your electricity bill, you will not make anything in the end.

2. Mining Platform: Cloud Mining or Physical Mining




Profitability also depends on the mining system a miner plans to utilize. If a miner is investing in setting up a whole mining rig and buying all the related hardware then the profits will come late as the initial capital investment is big and sometimes the special mining hardware is not available easily and the import from other places become costly. However, if a miner uses the cloud mining technology, which lets you mine bitcoins from your home computer and all you need is a reliable cloud mining provider, this process reduces capital costs and low operating costs as the electricity consumption will lowered.

3. The Difficulty of Mining

As more miners enter the network to compete against each other in order to solve a puzzle for earning bitcoins, the difficulty increases. This network is designed to generate a limited number of bitcoins in a particular time duration. When there are more miners, the difficulty increases from moderate to very high which affects the profitability of each miner in the network.

4. Exchange rates

The final factor responsible for profitability is the value of bitcoins against standard currency or dollars.

 



How To Get Started With Bitcoin Mining? – Bitcoin Primer For Beginners

How to Get Started With Bitcoin Mining?

The growing popularity of Bitcoin made them look like an easy game to profit from. This easy part may be true if you are looking forward to buying bitcoins directly from an exchange or a private seller. Buying is easy, you pay the seller in other currency (most likely, dollars) and you get bitcoins transferred to your wallet in return. Although, making or mining bitcoins yourself is not easy. It takes investment, time, effort and huge electricity power for truly making profits. There are several guides on the internet which lay out the steps you need to take for making profits by mining bitcoins. However, in this business, you will meet two kinds of negative people, which include:

a) Scammers: They may claim to help you make profits from the Bitcoin business.

b) Losers: They may say that bitcoins are nothing and you will just lose all your money.(This is true to an extent if you are not careful about bitcoin price volatility and on another note you should know the technicalities of mining process as to investment vs profit)

bitcoin mining howto guide

In order to keep our readers on the sensibly logical and right track, we recommend that you stay away from both of these losers. In addition, we have written this article to give you a comprehensive understanding of the Bitcoin mining process, and to answer the questions and clear the doubts in your mind related to setting up a Bitcoin miner as well as buying bitcoins.

Setting Up a Bitcoin Miner in Three Steps




Setting up is not easy and will cost a huge chunk of money. The first step is below –

1. Calculations

There are three parameters to calculate and consider before getting to the next step because these are the factors that will affect the miner’s overall capability and profitability.

Hash rate: Hash rate is calculations performed by your miner in each second. As you may know, you have solve the mathematical puzzles in order to mine bitcoins. This hash rate decides the speed of those calculations as higher hash rate increases the probability of your success in solving the transaction block. This is a very significant part of your miner and contributes directly to the performance and profitability.

Energy consumption:

Kilowatts of Electricity consumed by your miner or mining hardware while you are busy in mining bitcoins for making profit. Keep this in mind, your profits simply sink in paying expenses of electricity. This is why it is advised to only start the mining venture in the regions where electricity costs are a bit low. Dividing the hash rate by no. of watts will tell you how many hashes you are going to get for each consumed watt.

Profitability: Calculate the overall profitability of your miner by using this mining profitability calculator or use this. Input parameters like hash rate, energy consumption, overall equipment cost, and the present bitcoin price. It will give you the break even point i.e. the point from where you will start making profits and how long it will take to get the return on investment.

2. Buying & Setting Up Your Miner

For setting up your miner, you have three choices. All are different from each other and more powerful. Once you decide what hardware you want, you are ready to jump to next step. The three choices are; home computer miner, FPGA miner and ASIC miner.

Home Computer Miner: This is the simplest and oldest method of mining by installing high power GPU and PSU into your home computer and using it for mining bitcoins. This process is so 2011, slow and outdated because the difficulty of Bitcoin mining these days has accelerated to a much higher level.

FPGA Miner: It is an integrated circuit which is configurable once built. It is then configured by the manufacturers to design specially for Bitcoin mining. These miners provide better performance than the home computer miner.

ASIC Miner: This is the best miner in the market because ASICs are especially manufactured to do only one thing at its best i.e. Bitcoin mining. The specialty offers two great benefits to miners which are; mind-blowing mining speed and low energy consumption. Presently, these are the latest miners and perform up to the current mining standards.

3. Get Software and Start Pooling Around




If you are using the home computer miner (which is not recommended anymore), you will need a standard bitcoin client which will connect your computer to the network of Bitcoin and you will also need to download a mining software which will give instructions to your miner and will do the hard work. However, if you are using an ASIC miner, you don’t have to worry about these things because latest ASIC models come fully configured with all things set up and ready to use for mining. It is kind of the plug and play thing.

Your miner is farmed and now fully ready to start mining. Congrats! You would be surprised to know that Bitcoin mining is no more a one-man-organization sort of thing as you can’t compete in terms of difficulty. So the best ideas is to simply join a mining pool that is suitable for you.