When I first heard about Bitcoin, I had doubts about whether it is the safest road to travel or not. I heard stories of people making thousands of dollars relaxing in their bedrooms. While the triumphant tales pushed me to browse different websites searching for reliable information about Bitcoin Mining, I never made a trial to invest my salary in it.
Therefore, I waited for about five years before making a financial commitment. My buddies have been asking why I have recently decided to get into Bitcoin mining after a long time of reluctancy. While I browsed articles from A1 Credit, the best answer is; learn the concept before trying it.
Do you have the same question? Well, let us share a little information about Bitcoin mining, which can give us a comprehensive answer about why I choose to start crypto mining recently.
Is Bitcoin Worth It In 2020?
To start it off, I had this question ringing in my mind every time the urge to get into crypto mining hit me. I would always sit down, dividing my salary with my expenses, and wondered if Bitcoin mining would solve my problems. I know you share the same sentiments, asking yourself, is Bitcoin mining profitable? Is it worth it in 2020, especially after a significant percentage of the stock market has been brought on its knees due to coronavirus? The shortest answer to this question is ‘yes,’ and the most extended answer is ‘the mining’s profitability is complicated.’ So, why is it a complex idea? Learn the reasons for this article.
At the beginning of cryptocurrency mining, the idea began as a lucrative income source for those who had the chance to about 50 BTC every ten minutes, just mining from their homes. That is, successfully mining one BTC block and holding on it from 2010 to 2020 would make you $450 000 worth of Bitcoin.
The early adopters needed a powerful computer, a stable internet connection, and an in-depth knowledge of Nostradamus. However, with the advanced bitcoin mining industry, modern mining is not much hectic. You only need to buy some bitcoins on an exchange platform such as Coinbase at your couch’s comfort. Is it that simple? No. If you are interested in making extra income from Bitcoin, you have to learn a few basics and see if you can profit from mining.
What Is Bitcoin Mining?
Bitcoin mining is defined as adding transaction records to Bitcoin’s public ledger or Blockchain. A Blockchain exists primarily to confirm every transaction and to ensure that every miner can access the register. It also distinguishes legal transactions from attempts of re-spending what had already been spent. Therefore, Bitcoin mining can be understood using three concepts;
Transaction Records
This is the verification and addition of every transaction to the public ledger. From the records, every miner can view all the transactions that have occurred in the blockchain history.
Proof-Of-Work Calculations
These are the energy-intensive puzzles that each Bitcoin mining machine solves every ten minutes. When the miner solves the puzzle before anything else, they earn an extra block to the Blockchain.
Bitcoin Block Reward
A Bitcoin block reward is a plus transaction fee paid to the miner who solves the puzzle first. The rewarding process is done every ten minutes for every mining machine. However, the puzzle’s network difficulty changes approximately 14 days to give every mining machine a chance to solve the puzzle in ten minutes.
Also read: Should Bitcoin Replace Currency of Central Banks?
Hashrate And the Reason Why I Got Into Bitcoin Mining Recently
Hashrate is the degree of miners’ computational power. It is also the computational rate at which individuals or organizations fight to solve more puzzles. Therefore, the higher the computational power reflects more solutions to the mining machine. Initially, a machine’s hash rate was measured in hash per second (H/s). However, out of the recent growth in Bitcoin mining, the measurements of hashrate has been pre-fixed in the following order;
- Kilohash (KH/s)
- Megahash (MH/s)
- Gigahash (MH/s)
- Terahash (TH/s)
- Petahash (PH/s)
Based on the growth above, it is clear there has been growth in the global mining hashrate, which is one reason why I got into Bitcoin mining recently.
The increase in global hashrate results in a decrease in each miner’s revenue per Terahash (TH/s).
Also read: 6 Ways to Learn About Cryptocurrency Investment
How to Calculate Bitcoin Mining Profitability
Another reason why I decided to venture into Bitcoin mining could be its profitability. Although it might be complicated to calculate your business earnings, it is the most profitable idea to start in 2020 if you have the right information. There are scary stories about Bitcoin mining and energy consumption. The stories are likely to push you away, making the cryptocurrency market sound like a scam to many new entrepreneurs.
However, it should be understood that the energy consumed is the underlying cost of mining. Therefore, for a miner to earn a significant profit from the business, the mining revenue has to outweigh the energy costs and the amount invested in the mining hardware.
So, how do I calculate my profits from mining?
The most fundamental reason why I got into Bitcoin mining is the price of the Bitcoin itself. This means the profitability of the business depends on the current price of the bitcoin. It would help if you mined enough bitcoins to pay for other ongoing costs and recover the amount you invested in the machine. There are several factors which can determine the profitability of Bitcoin mining;
- Cheap electricity.
- Efficient mining machine hardware.
- Reliable mining pool.
- Fees charged when selling the Bitcoin.
Related: How Foreign Exchange Can Affect Your Business? And How You Can Adapt?
Final Thoughts
Have you learned why I got into Bitcoin mining recently? The overall answer to the question is the improved mining environment. Lately, there has been technological advancement, making Bitcoin mining a more profitable business.
For example, the Bitcoin miners have experienced a reduction in electricity costs, technological innovation leading to advanced machine hardware, reliable mining pool, and the ever-increasing Bitcoin price. Therefore, the mining environment has improved from the initial business environment, which is the main reason for my decision.
