Back in the day, mining Bitcoin was an affordable way to earn cryptocurrency passively. It required little to no additional devices and was efficient on electricity. Now, however, the process of mining Bitcoin has become a costly endeavour with the need to hire or buy special machinery. Moreover, it’s a power-heavy process to mine Bitcoin. So, is it still worth the reward you get for mining Bitcoin? In this, we look at whether Bitcoin is still profitable to mine.
Bitcoin mining difficulty
An important factor in measuring Bitcoin’s mining profitability is looking at the mining difficulty and how that changes. In brief, Bitcoin mining difficult looks at how much work needs to solve the complex algorithmic problem that allows the miner to add a new block of the transaction to Bitcoin’s blockchain.
Approximately every 2016 blicks or so, the mining difficulty changes – either increasing or decreasing depending on how quickly the previous 2016 blocks were mined. If the time was short (less than two weeks), the difficulty increases. If the time was longer (more than two weeks), the difficulty decreases. This change is in place to try and keep the average time per block mined around ten minutes.
If the mining difficulty is increasing, it will take more resources to mine each block and each reward will yield less profit. Miners with older hardware will also struggle to keep up with increased difficulty.
Bitcoin mining reward
The reward received per block mined also changed, although a lot less frequently. Approximately every four years, the Bitcoin received from mining a block is halved. This is to slow down the speed at which Bitcoin is mined – to ensure supply/demand doesn’t present a problem if all of the Bitcoin is mined too quickly. At the current time, miners receive 6.25 BTC per block mined.
Resources to mine Bitcoin
Mining Bitcoin now takes specialised hardware. People used to use personal computers and then the process became too energy-intensive and then the introduction of the more efficient, specially designed f application-specific integrated circuit (ASIC) chips. Now, most miners make use of Bitmain Antminers. These are specifically designed to mine cryptocurrencies (such as Bitcoin, Ethereum, Litecoin) by solving complex algorithmic puzzles to add blocks to the blockchain.
When looking at Bitcoin mining costs, it’s not just the hardware but also the electricity and maintenance resources that need to be calculated. Bitcoin mining hardware is extremely power intensive and although the hardware can be run from home, often it’s not worthwhile because of how much electricity is used in the process.
To stay ahead and profit from Bitcoin mining
One of the best strategies to avoid losing money mining Bitcoin is to stay on top of the difficulty curve and increase the odds of maximum profitability by purchasing updated and modern mining hardware at a good price. If you spend too much on hardware, you risk eating into the potential profit before even mining, but if you operate off too-old hardware, the mining won’t be efficient enough to profit.
So, at the end of the day, you can profit from Bitcoin mining but it takes dedicated effort and clear focus to calculate the right strategy and look at the right way to approach buying the right hardware and working out how to use energy the most efficiently.
Using a web-based calculator to run a cost-benefit analysis can help you determine how profitable the process might be for you. With this, you can work with different numbers and figure out where and when you might begin to profit.