Bitcoin mining is a process of creating new bitcoins to the blockchain network by verifying the bitcoin transactions. These verified transactions secure the bitcoin network for which the miners get rewards in bitcoins.
Earlier, miners can easily mine bitcoins using their personal computers. But mining with a PC is not a viable option anymore due to high competition among bitcoin miners. As technology has changed, miners are now using high processing computing devices for mining bitcoins.
Well, a miner only makes a profit when the earning of rewards exceeds the cost of mining. So it is the biggest question for many individual miners whether bitcoin mining is profitable in this heated competition.
Is Bitcoin Mining Profitable?
It depends on several factors to say whether bitcoin mining is profitable or not. Here are some essential things to consider:
- The cost of power required for mining (electricity cost)
- The cost of computing devices (ASIC or GPU)
- The complexity of the computational problems
- Price of Bitcoin
It is important to analyze all the above factors to say whether mining bitcoin is profitable or not.
With the growing number of miners in the bitcoin network, it is not feasible to solve complex problems using personal computers.
For that, you need high processing computing devices like the Graphics Processing Unit or GPU. This is more powerful than conventional CPUs in terms of processing. Some miners also use an application-specific integrated circuit (ASIC) system for mining bitcoin.
However, these devices consume a lot of energy. So, the cost of electricity will be very high.
The Cost of Computing Devices
As mentioned above, high processing computing devices are way more powerful than personal computers. These devices also come with a higher cost, and for some individuals, more powerful devices are not affordable.
Some ASIC systems are so powerful that they offer 100 billion times the personal computers. That does not mean you can’t solve the mining problems with the PCs. But with such high competition, it is not profitable anymore.
For acquiring such devices, a huge investment is required. However, if you are not planning for long term mining cryptocurrencies, drop the idea of buying such a device.
The Complexity of the Computational Problems
Another major factor that matters is the complexity of computational problems. As the number of miners is rapidly growing, the complexity of the problems is also increasing.
With the recent changes in the algorithms and technology, it is very difficult for a conventional miner to solve the complex problems. Moreover, the time allotted for verifying the transactions is limited, and a miner can’t solve them if he or she is not that proficient.
Price of Bitcoin
Last but not least, the major factor is the bitcoin price. However, the bitcoin price is increasing now, but nobody knows about its future value. As the price of bitcoin is volatile, it depends on the price of bitcoin at the time of getting the rewards.
If the price of bitcoin increases during you get the rewards that’s on your side; otherwise, you may end up making a net loss. However, most bitcoin enthusiasts are very optimistic about the price of bitcoin.
Apart from this, the shifting rewards also have a major impact on the overall profitability.
If you are aware of bitcoin halving, then you must have known about shifting rewards. Every four years, the reward for successful mining gets halved. That means, when bitcoin was first released, it was clearly mentioned in the whitepaper that the rewards for mining bitcoin would become half in every four years. In 2020, it will become 6.25 units of bitcoin, which was 50 units of bitcoins in 2009 for mining bitcoin.
As all the factors are variable in nature, it depends on your ability to mine bitcoin and become profitable. However, if you want to earn bitcoins, then you can also earn it by trading or investing in it through online trading platforms Like this system. It is a safe and secure trading platform. Hopefully, the article has helped you to understand bitcoin mining and its profitability.