Many of us will have strange reaction on hearing the phrase “Bitcoin mining”. What does the term actually mean? Well, “Bitcoin Mining” refers to the process of creating new coins and updating the ledger of Bitcoin transactions, also known as blockchain. These processes of mining are performed by extremely powerful computers alternatively known as ASICs. These computers would compete against other miners with an intention to guess a specific number. The first miner to guess the number would eventually get a chance to update the blockchain and would be rewarded in turn with a Bitcoin. In this article, we will discuss about the below listed pointers to know whether Bitcoin mining is profitable or not?
Strong investment
BTC mining is highly expensive today. An inspiring miner today would need to invest heavily on equipments, cooling and storage. In earlier days of mining, when the businesses were small, small players used to mine successfully. But now it’s all big businesses out here in the mining field which makes the competition super tough for SMEs. In fact, the hiked electricity cost of the equipments used can alone wipe out the profits that you have gained in no time.
The rate of difficulty in Bitcoin mining
In recent times the difficulty rate in Bitcoin mining has reached its peak and has become an important matter of concern for the Bitcoin miners. The higher the rate of difficulty, the miner is less likely to earn the Bitcoin. The rate of difficulty changes every 2 weeks to maintain the blockchain.
Mining pools could be handy
Mining pool, in simple words, refers to the process of mining in a team. Through these pools, individual miners combine their resources to ensure more economical and effective mining process. So, if are a small miner with limited resources, it is always good to join a bigger pool in order to be successful.
When the pools succeed and earn the Bitcoins, it gets divided amongst the miners on the basis of power that they have used during the process. The miners who have used the highest power will earn the largest reward.
Reduction in the rate of Bitcoin reward
Every 4 years, the Bitcoin rewards as was set up by Nakamoto, get reduced to half. The number of Bitcoin an individual used to earn initially was 50. Later it was reduced to half and the reward became 25. Again that was reduced to half to 12.5 and probably this is the current reward. It is also been stated that the reward will be again reduced to half in 2020. Thus this is an intimation for the prospective miners that the reward rate will again decrease in future and would be difficult as far as “increase” in rate is concerned.
Final words
So, would BTC mining be actually profitable? In one word, Bitcoin is here to stay and more and more people are interested in BTC trading these days. Bitcoin Revolution is an app to auto trade bitcoin and other cryptocurrencies. Increased popularity of BTC trading triggers the need for more BTC coins which you can only get from mining. If solo mining seems too expensive for you, you can try mining pools out there. Also, keep check on a web based profitability calculator which can run a cost benefit analysis of BTC mining for you.