Recently, people have been questioning the point of Bitcoin mining. This article will answer the question, is Bitcoin mining worth it?
Bitcoin has once again surpassed the cost of an ounce of gold. According to this report, one Bitcoin is worth $1,268, while gold's trading value is at $1,235.
Now, if you're interested in Bitcoin and wondering if this is the year you should try Bitcoin mining, you need to understand that there are certain factors that affect its profitability.
Let's take a look at those factors one by one so you can decide for yourself: is Bitcoin mining worth it?
Some people think that Bitcoin mining is as easy as buying a machine, letting it do all the work, and presto! Money-o!
You probably already know that there's some mathematics involved when it comes to earning Bitcoins. Specifically, miners have to solve a mathematics problem before they can get to the good stuff. It's like a math contest: solve problems, win prizes (Bitcoins).
Of course, the problem isn't going to be as easy as one of those math CAPTCHA questions. This is why you need a machine. And not just any machine, you need a specialized device - a Bitcoin miner.
Back in the good old days of Bitcoin, you only needed two things to participate in mining: an internet connection and a CPU. When Bitcoins started becoming popular, CPUs were replaced with GPUs (graphics processing units). Today, if you want to mine Bitcoins profitably, you need an ASIC (Application-Specific Integrated Circuit).
And ASICs come in different price ranges. Whether or not is Bitcoin mining worth it will depend on how much you're willing to spend on your miner.
Now, if you're thinking of getting yourself a second-hand ASIC, you're better off holding on to your money. Bitcoin mining is as competitive as it gets. You can be sure that the other miners are using the latest ASICs to make bitcoin mining worth their time.
Take note of these two terms: hash and hash rate.
Hash is basically the math problem your Bitcoin miner needs to solve. Hash rate, on the other hand, is the rate at which your hardware solves these problems.
Basically, the more advanced your miner is, the higher its hash rate will be. It also means more Bitcoins earned. So you need to take this into consideration when you're choosing a miner.
You should also note that even with the best ASIC money can buy, you still have to contend with this thing called Bitcoin difficulty. Simply put, difficulty refers to the complexity of the mathematical problem to be solved. When total hash rate shoots up, difficulty also levels up.
Add to this the number of people who have armed themselves with powerful miners and you've got a network that drives the difficulty higher. Just imagine how disadvantaged someone who wants to get into Bitcoin mining would be if he or she has subpar mining equipment.
This is one of the many reasons why it's difficult to answer "Is Bitcoin mining worth it?" with a straight yes or no.
The good thing about technological advances is that you can now get a reasonably priced miner and still turn a profit. But your machine's efficiency is going to be useless if you live in an area where electricity costs are prohibitive.
As you probably already know, Bitcoin miners are electricity guzzlers. You could probably save a bit if you know how to tap renewable sources of energy or in colder areas with electric heating. Generally, the warmer an area, the more power required.
So is Bitcoin mining worth it if you live in a not-so-cold area?
If you can find a way to get cheaper electricity without breaking the law, then you've got a higher chance of making your hardware do some awesome Bitcoin mining.
And then there's Bitcoin's value which isn't always going to hold steady at $1,268. The price of Bitcoin can drop suddenly due to government regulatory decisions or certain actions from the movers and shakers behind the scenes. Should Bitcoin's price becomes less than $300 for example, you'll have to mine longer, which means you'll have to pay more for electricity.
Doing things on your own is not advisable when it comes to Bitcoin mining. To do it profitably, you need to join a mining pool.
When you work with other miners, you increase your chances of completing a block relative to the pool's total hash rate. Now granted, there will be fees and commissions that will be deducted from your total earnings. But this is to be expected since the platform (mining pool) has to maintain its operations.
Eventually, when the mining pool starts to become profitable, the earnings are split among the pool members. Of course, it's not going to be an even split. The largest share goes to the miner who has done the most work.
Here's the thing, though, a mining pool isn't a guarantee that you'll be successful at Bitcoin mining. Experts recommend that you look into Bitcoin cloud mining or alt-coins as alternatives. You can also buy Bitcoins directly and exchange them for profit.
If this sounds reasonable to you, then you're a step closer to figuring out the answer to "Is Bitcoin mining worth it?"
Serious mining is a numbers game. It's not like a typical hobby where you'll do it when you find the time or when you're in the mood. If you want to get in the game, you could be up against someone who runs thousands of computers 24/7.
It's no coincidence why the process is called mining. It's labor intensive and not everyone who does it gets to hit the "goldmine."
There's also a finite number of Bitcoins to be mined. The rule is to cut the reward or prize for miners in half every four years to control Bitcoin inflation. That means from 25 Bitcoins every 10 minutes, there will only be 12.5 available to miners.
So you see, if you're only entering the Bitcoin arena, it's going to be mighty difficult for you to compete with "mining farms." Unless by some miracle, most of the competition gives up, you're looking at a minuscule share of the pie.
In China, miners have a definite advantage when it comes to keeping costs low. Not only can they access cheaper sources of electricity (hydroelectric and coal), they can also get their hardware cheaper.
In this context, is Bitcoin mining worth it? The answer is yes if you enjoy the same advantages the other miners do.
Where you live is also a big factor in determining whether it's worth it to mine Bitcoins. In fact, this may answer the question, is Bitcoin mining worth it?
In Venezuela, for example, mining is profitable. It's even more valued than government-issued currency plus electricity's almost free. However, there are certain dangers involved.
The country's secret police are currently hunting miners to arrest them so they can extort from them. There are other dangers as well. Criminals who kidnap miners and the like.
Meanwhile, in Spain, Bitcoin miners will have to register with Spanish authorities. This is because the country plans to tax Bitcoin-mining-related profits with the hope to tamp down cybercrime, money laundering, and tax evasion.
Experts believe that other European countries, as well as Latin American countries, could follow suit.
Did you know that someone was able to successfully mine Bitcoin on a 1985 NES?
We think it's an interesting point to bring up because "worth it" is totally subjective. Profit is not the only indicator of worthiness. Like this person who used an NES gaming system to mine Bitcoin, the goal could be different from simply earning more from the process.
That said, if profitability is your end goal, there's some good news. According to a study by an Illinois-based research team, a new machine called "Approximate" can increase Bitcoin mining by as much as 30%
The team led by Rakesh Kumar said that through Approximate, finding Bitcoins would require less time and power. Compared to traditional PCs, Approximate could also "generate as many hashes per second with less power consumption."
You should also remember that you're not just limited to the "Is Bitcoin mining worth it?" question. As we have mentioned earlier, you could look at your other options (Alt-coins). This is probably the best time for you to capitalize on Alt-coins, considering the landscape is just starting to be competitive and the rewards have not dwindled.
Given the costs - hardware, time, and the most important of all, money, you have to really do the math before you dive into the world of Bitcoin mining. It's not going to be easy if you plan to go at it alone. Joining a mining pool is the best chance you have of making a profit on Bitcoins.
You can also explore the alternatives. Look into Alt-coins or buy directly. The cryptocurrency world is evolving and for sure, we'll see lots of interesting developments in the coming years.
Maybe in a decade or less, no one needs to ask "Is Bitcoin mining worth it?" Everyone will just know the answer.
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