What is Bitcoin Mining?
Before we delve into the details of whether Bitcoin mining is still a profitable venture for miners in today’s world, we first need to establish a basic understanding of what exactly is meant by Bitcoin mining. Bitcoin mining is the process of receiving bitcoins in return of validating transactions for Bitcoin users. Unfortunately, the Bitcoin network isn’t preceived to be trustworthy as for many the concept of digital currencies is still a mystery.
In that regard, Bitcoin mining is a great way to contribute to the security of the Bitcoin network. Since miners do the work for the Bitcoin network, the network sees it fair to reward them with Bitcoins as compensation. This has been the case for more than half a decade, and all had been going well for miners in the beginning. However, with changes in technology and the introduction of huge mining farms, many people have been asking the question if bitcoin mining is still a profitable venture.
Change in Bitcoin mining
When Bitcoin mining was first introduced, it was simply a practice done by individual miners who had to run mining programs on their personal computers to validate bitcoin transactions and receive bitcoin payments as compensation. The reward was considered fair for the amount of work and capital (electricity cost / mining equipment cost) invested in the task. However, with the advent of ASIC – application specific integrated circuits – things changed for the worse for individual miners.
With the introduction of ASICs bitcoin mining stopped being profitable on a personal computer, ASICs paved the way for dedicated mining centers that had many machines with strong computation powers for the validation process. These centers could invest more in the venture, raising the stakes alarmingly in doing so.
The computation power of ASCIs is so superior to individual miners that it is close to 100 times their capability. This superiority, in addition to the fact that such centers have cheaper electicity costs because they are strategically located in countries where electricy is cheaper than the rest of the world, makes the average person doubt that he can profit from mining bitcoins.
Is Bitcoin mining still profitable?
So then, is bitcoin mining still profitable? Well, that depends whether the amount of money you invest in it comes back to you in full or at least up to satisfactory amounts. The primary costs of operation that need to be considered here are the electricity cost, the cost of the equipment used, and the value of bitcoins in your currency.
There are a few websites such as Coinwarz and vnbitcoin that can help you calculate the expected profit from your mining operation, make sure to take into account electricity costs. Apart from this, the only thing that can be done to tackle the problem of competing against professional mining centers is to pool resources with other individual miners. The individual cost that a miner bears can be reduced in such a setup, and the compensatory bitcoins can be shared among the individuals.
Another option if you are set on trying to profit from cryptocurrency mining is to try and mine altcoins. Your risk increases exponentially because altcoins have a much higher volatility rate than bitcoin, but at the same time you can earn massive profits if you might an altcoin and it goes up in value. Treat altcoin mining more as a gamble than an investment because the altcoin market is very unpredictable and many times it is a victim of pump and dump groups. Coinwarz – mentioned earlier – also provides a series of cryptocurrencies ranked based on their profitablility of mining, you can use resources like that to help you in your altcoin mining venture. Furthermore, if you are looking to reduce any overhead from electricity costs to equipment costs consider using sites like nicehash or miningrigrentals to rent a mining rig of your choice for a set period of time and mine altcoins of your choice.
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