As you already know Bitcoin mining is a process of creating coins from scratch. This is a process active and popular among miners since 2009 when this digital currency was formally introduced to the world. The interest increased rapidly when Bitcoin reached $20,000 back in 2017. In detail, this is a process of exchanging the verification process in order to validate the transactions. All of these processes provide crucial security to the system itself. This is the reason they are awarded coins in return. The only way miners can profit from their work is for the price of Bitcoins is bigger than the price of mining. With the recent changes in the approach and the introduction of huge systems that have massive production of coins, there is the question of if this is still profitable for small miners.
It is of the highest importance to know that there are a couple of key elements that determine if mining is actually profitable. The most important one of all of them is the cost of electricity, the price of the machines that actually do the mining, and providing the service itself. These are all important questions that need to be answered by every miner. The way of measuring these is called the hash rate. Hash rate tracks the success of every miner to solve the problem presented before him or her. There is the question of competition as well. The more miners actually enter the market, reaping the benefits become much harder. One of the things that provided massive help to the miners is Bitcoin communities. If you are interested in taking a look at how they work, be sure to check out bitcoinfuture.app.
So, we are going to try and provide some answers to the main question, is Bitcoin mining still profitable in this day and age. Without further ado, let us begin.
To the root, mining every possible digital currency looks like something that you shouldn’t avoid. The investment on your behalf consists of buying proper hardware and paying electricity bills until you lay down the first profit. The miner can be rewarded either with a small fraction of a coin or with the whole coin. Back in the day when the whole process was at the beginning, people had a relatively easy task of mining Bitcoin from the comfort of their homes. We can say that the whole concept started to change in 2019. As it is the case with the crypto itself, the rewards you are getting for mining are halved.
At the same time, we can see that people started creating whole companies with the only intent being mining Bitcoins and trading them in some cases. Just to present you with an idea of how profitable it is, we are going to provide you with an example. For a proper GPU, you will be required to invest no less than $600 for one piece. If you are aiming at mining some less popular cryptos, you will be able to start with a $3,000 investment. But, in this day and age, we can see that some miners have up to $10,000 as an initial investment. This is a pretty tough competition to beat. You will certainly agree with this claim of ours.
The Current State of Bitcoin Mining
In the last six months, the difficulty of mining every block has increased significantly. The main reason for this was the success of Bitcoin achieved in 2019. This was one of the best years in a decade long history. It led to increased activity in mining this digital currency. Also, the whole process of mining has changed a bit and it could be a little unclear to some miners. The changes were based on the amount of power required for the performance. This change plus the increased competition show us how hard it became. The real answer to the question from the beginning of our article is that Bitcoin mining is no longer profitable for small miners and it will become even less profitable as more people enter the market. The only way you can make it profitable for yourself is to have a whole company that has this approach.
How About Altcoins
Altcoins is a term used to describe digital currencies that are not Bitcoin. 2019 was the year that was pretty harsh to these. But we can see that some of them started picking up in the last couple of months. That doesn’t mean that interest in them started increasing. In fact, we can see that the interest in mining altcoins is not as popular as some experts predicted and the father of all cryptos is till dominates the market cap heavily. At the same time, it should be said that a wide array of altcoin’s trading volume suffered and that a high percentage of them are not performing at the required level. This caused cashing out much harder than it was before.
Don’t be annoyed by this state because there are some signs that the situation might change in the near future. However, the world of cryptos is pretty unpredictable and many experts failed with their predictions. The global pandemic of coronavirus had a massive impact on all of the cryptos. Bitcoin suffered a 50% decline in its worth. There is no reason for us to believe the other cryptos didn’t suffer the same or similar fate. In fact, we can even take a look at some charts that describe how bad they’ve got in the last couple of months.
With the significant increase of people on the market, making a profit with mining Bitcoin and almost every other crypto is totally out of the question for the time being. We can see that the situation is not as good as it should be. The investments required for mining the digital currencies skyrocketed in the last couple of months, both electricity bills and the investment needed for hardware. Currently, the Bitcoin network is favorizing large-scale mining, so the small miners really don’t have the necessary money to compete with that.