Since the first cryptocurrency, bitcoin was introduced in 2009 by satoshi its value has continued to rise steadily over the years. Bitcoin was at its highest value in December 2017 costing a whopping sum of $20,000. It later plummeted to about $8,000 in 2019. As of mid-2020, it stands at $9,000. The success of bitcoin has given rise to other cryptocurrencies in the market with Ethereum and Litecoin occupying number 2 and 3 top spots respectively.
The two major ways of getting bitcoin are to either buy it or mine it. When bitcoin first came out, mining was quite simple and straightforward. Recently, with its increased value in the crypto market, mining bitcoin requires a little more knowledge and a wise approach.
With the rave about bitcoin and cryptocurrency, perhaps you may be pondering on how to mine bitcoin, and if bitcoin is profitable. There are factors that affect the profitability of mining bitcoin. Some of these factors are briefly explained below.
1. Rig cost
A rig is a piece of sophisticated computing equipment that helps miners solve hash problems and grant bitcoins as rewards for solving those problems. When bitcoin was first released, miners could use basic computers to mine bitcoin. But all that is in the past, as the advent of application-specific integrated circuit chips (ASIC’s) with computing power and speed of unbelievable proportions, has made the use of personal computers obsolete. ‘” With great power and comes a great price,” and this is evident in the cost of purchasing an ASIC whose cost may be in the range of $6,000-$10,000.
2. The difficulty in mining
To preserve the value of bitcoin only a limited number of coins can be mined within a specific time frame. That is why the more bitcoins in circulation, the more the difficulty in mining. And the higher the rate of difficulty, the less successful bitcoin mining is for miners.
3. Electricity rate
Due to the sophisticated invention that goes into building a rig, most rigs consume huge amounts of power. This could be unprofitable for you if the electric rate in your state is quite high. Even in states with lower electric rates, most bitcoin miners have discovered that the electric rate for mining just one bitcoin could total about $3,000.
Although mining bitcoin may seem difficult at first glance, with access to the right knowledge, new miners can still find bitcoin mining profitable.
One of the things new miners can do to get a good head start when mining bitcoin is to join a mining pool. A mining pool is a team of miners who pool resources so as to mine bitcoin faster. Members of a mining pool concert efforts to reduce the difficulty of mining which increases their chances of finding solutions to hashing problems first. Although, the reward is nothing compared to individual mining, joining a pool reduces the cost and increases the frequency of success in mining bitcoin
Mining bitcoin can be profitable if a miner has in-depth knowledge of the intricacies of mining before beginning. It’s best to do a cost-benefit analysis before commencing bitcoin mining. Consider the cost of a rig, the cost of power, and the ease of mining, and then weigh these against your potential profit. These should help inform your decision to mine independently or to join a mining pool.