Bitcoin mining is the process by which a cryptocurrency is put into circulation. To use bitcoin, you must attempt to complete a "block" containing recent transactions. They are recorded on a digital ledger called the blockchain. Once the block is completed, a certain amount of bitcoins will be given as a reward.
Blocks in the blockchain
The entire history of bitcoin transactions is recorded in a digital ledger called the blockchain. Since the blockchain is public, anyone can access it. The data is stored on the network so it is not susceptible to hackers or central failures. Each entry or series of entries in the blockchain is called a block. It is sent to the network and added to the blockchain after the network is accepted as a valid transfer.
Is it possible to earn significant funds on a Bitcoin farm? According to experts, it depends on how much you are willing to spend initially. At the same time, the profitability of bitcoin mining depends on many different factors.
In order to find out the prospects for earning, special calculators have been developed. They arethey calculate various parameters, for example, the cost of electricity and your equipment, as well as other variables, and then, taking this into account, evaluate your predicted profit (respectively, they allow you to estimate your possible earnings on cryptocurrency). Before looking at a brief example of how this is calculated, let's take a closer look at the basic parameters.
Hash Rate
Hash is a mathematical problem that the miner's computer must solve. The hash rate is the rate at which these problems are resolved. The more miners working in the Bitcoin network, the higher the Hash Rate. This value can also measure the performance of your Bitcoin mining farm. Today, bitcoin miners (superpowerful computers) have different parameters. Their performance is indicated in MH/s (mega hash per second), GH/s (giga), TH/s (terra) and even PH/s (Peta).
Bitcoins per block
Each time the above math problem is solved, a certain amount of bitcoin is created. Their number per block started at 50 and gradually halved every 210,000 blocks (for four years). Until recently, the number of bitcoins received for each of them was 25. However, recently this figure has been halved, and the reward has been reduced to 12.5 bitcoins.
BTC Persistence
Because the Bitcoin network is designed to receive a certain amount of bitcoins every ten minutes, the complexity of this taskmust increase in order to be able to accommodate the increase in the Hash Rate network. Basically, it comes down to just one thing: the more miners joining the mining, the harder it becomes to make money on cryptocurrency.
Electricity tariff
This is one of the main expenses in the mining process. Running a Bitcoin generating farm consumes a lot of electricity. You need to know your rate in order to calculate profitability. This can usually be determined on your monthly electricity bill.
Power consumption
Each miner consumes a different amount of energy. Before calculating the profitability, make sure you know the parameters of your equipment. This can be easily found on the Internet. Power consumption is measured in Watts.
Pool fee
In order to mine currency, you need to join a mining pool. This is a group of miners who come together to generate bitcoins more efficiently. The platform that brings them together is called a mining pool and requires a certain fee to keep it running. The pool manages bitcoin mining, and the income is distributed among team members depending on how much work each miner did.
Time interval
When calculating how profitable mining on a Bitcoin farm is, you will need to determine the time frame. This means that the more time you use, the more cryptocurrency you will earn.
Decrease in profitability per year
Probably thisthe most illusory and important variable of all. Its essence is that since no one can really predict how miners join the network, it is impossible to predict how difficult this work will become in a few weeks, much less months or years. In fact, this is one of the main reasons why no one will ever be able to guarantee whether bitcoin mining is profitable.
The second main reason is the conversion rate. Below is an example of how you can calculate the yearly rate of decline in profitability and use it to evaluate seriously growing complexity. Based on these calculations, reviews of Bitcoin farms are built.
Conversion rate
Since no one knows what the BTC/USD rate will be in the future, it is difficult to predict whether bitcoin mining will be profitable. If you participate in the generation only in order to immediately spend what you earn, this does not cause much difficulty. But if you plan to convert your earned bitcoins into any other currency in the future, this factor will be of great importance.
How to calculate profitability?
Today, one of the most advanced miner devices is the Antminer S9. This is exactly what is known as an ASIC setup. It has a mining rate of 14 TH/s. If you use a simple bitcoin calculator, you will see that in this case you will earn about 1 BTC per month. But, of course, this calculation does not take into account the cost of equipment, electricity, pool fees, etc., which inevitablywill be included in the costs of the Bitcoin farm. A step-by-step instruction for forecasting earnings requires you to calculate all this data together. This can be done using the following statistics:
- 2 % pool fees;
- 12, 5 BTC as block reward;
- 14 times the hash rate;
- 1375 W power consumption.
It turns out that in 12 months you will be able to receive about $5,000. However, if you subtract the cost of equipment, this figure will be about $ 3,400. Of course, this result may be different depending on the cost of your electricity, changes in mining difficulty and, most importantly, changes in the price of bitcoin. So you can probably get rich mining cryptocurrency at home if you buy some heavy duty hardware while incurring very low electricity costs. The performance and price of a Bitcoin farm are seriously related, and you won’t be able to save on installations. Even though homemade cryptocurrency mining is an expensive business, there is another option that may be appropriate for you. It will help you get into the game at a lower rate.
How to get bitcoins with cloud mining
Not so long ago, a new concept called "cloud development" appeared. This means that you are not buying physical hardware, but rather renting computing power from another company and getting paid based on how much power you can use. This looks like a very good idea, sohow you do not have all the problems with buying expensive equipment, storing it, cooling it, etc.
However, when you make the calculation, it turns out that this is not very profitable in the long run. If you are offered unusually favorable conditions, these are probably fraudulent offers.
If you want to try real cloud mining, you can use Genesis Mining, the only online bitcoin mining company today that has been around long enough to prove it's not a scam.
So is Bitcoin Mining profitable?
It is assumed that you can eventually profit from mining on a Bitcoin farm, but only if you invest a lot of money in a good mining station (for example, Antminer s9). If you do not have a lot of money and a lot of time, then stay away from mining and just invest in buying bitcoins with a long-term view.
Bitcoin alternative
Another option you might want to consider is developing Altcoin instead of Bitcoin. There are hundreds of varieties of this cryptocurrency available on the market today, and some of them are still very easy to mine. The problem is that, since there are so many types, it's hard to tell which ones are worth spending your time on. According to experts, good Altcoin categories are Litecoin, Dogecoin and Peercoin.
