Bitcoin value had risen from $300 to $20,000 per coin three years ago, which surged interest in the cryptocurrency space. It had dropped to $8,000 last year. There are many cryptocurrencies in the market with similar value swells and dips. However, other popular alternatives include litecoin and ethereum.
When you buy BitCoin on an exchange like bitcoindealers, it is very simple, safe, and secure. It is the best destination for investors in Australia. Here the dealers are experts in buying and selling BTC. Some investors prefer to mine their BTC rather than buy a fraction.
What is BTC mining?
BTC is a decentralized option for a centralized banking system. It means the operation and fund transfer from one account to another is not regulated by a central authority. Centralized offers peace of mind because when you transfer money from your account to someone else’s then the bank only has the authorization to update the ledger. On the other hand, the BTC system has a ledger, where independent miners are allowed to update the ledger.
Is BTC mining profitable?
For mining to be profitable there are many factors to consider.
‘Hash’ is a mathematical problem the computer of the miner has to solve. Your hashrate depends on the number of guesses computers can make within one second. The units of hashrate are –
- MH/s [Mega Hash = 1m hashes/sec]
- GH/s [Giga Hash = 1b hashes/sec]
- TH/s [Terra Hash = 1t hashes/sec]
- PH/s [Peta Hash = 1000t hashes/sec]
When a miner’s computer makes the right guess, a specific number of bitcoins get generated. In 2009, the number was 50 BTC and it split every 210,000 blocks [last four years]. Currently, the bitcoins rewarded is 12.5 per block. The last block-splitting was in 2016 and the oncoming one is in 2020 July. Once the splitting occurs BTC reward will decrease to 6.25 per block.
Bitcoin inventor Satoshi Nakamoto created the mining rules where more mining power in the network the hard it becomes to guess the solution to the mining mathematical problem. The mining process hardship depends on self-adjustment to accumulated mining power possessed by the network. The more the miners, the harder it gets to answer the math problem. In case, many miners drop then answering the math problem becomes easy. This concept is called mining hardship.
Miners consume lots of electricity during powering the noisy machines and even for cooling. Therefore, find your electricity rates to calculate profitability. You can check your monthly utility bill to identify the difference in cost before and after installing the mining setup.
Power consumption gets measured in watts. Each miner differs in its energy amount consumption. Find how much your miner consumes power to calculate profitability.
Mining pool alternative takes a specific earning percentage [generally 2%] for their services.
Bitcoin prices in the future are unpredictable. If you plan to convert mined BTC into currency then this variable can impact your profitability.
Hardship increases every year
No one can predict the number of miners that can join the network or how hard it will be for mining in the coming 6 weeks, 6 months or 6 years. Since the inception of BTC, profitability has dropped a couple of times.
The last two variables [price & increase in hardship] are the reasons you cannot get a perfect answer to whether bitcoin mining is profitable or not.