What’s the first thing that pops into your mind when you think of the word “cryptocurrency”? Chances are, your answer will be “mining”. After all, it is an incredibly popular activity that a lot of people associate with blockchain and digital currencies.
Despite its seemingly ever-increasing popularity, however, mining has been on the decline in recent years. It is not considered to be a worthwhile investment anymore – equipment is incredibly expensive, while the rewards you get are relatively small. That is true even for Bitcoin – the world’s number 1 digital currency.
Bitcoin is a proof-of-work cryptocurrency and can thus be mined quite easily – but it is barely ever worth it anymore. However, if you’re determined to become a Bitcoin miner, don’t lose all hope – it is still possible. But before we take a look at how it can be profitable, let’s first establish what bitcoin mining is.
Table of Contents
What Is Bitcoin Mining?
Cryptocurrency or blockchain mining is called that because it resembles the gold mining process – it requires exertion and makes the commodity available at a slow and steady pace.
Bitcoin mining involves miners – a group of people that have special equipment – verifying and adding records of crypto transactions to a public ledger called the blockchain. It is called that because if it were drawn, it would resemble a multitude of blocks connected to each other, like a chain.
Bitcoin miners confirm the fact that a transaction has actually happened, and send that information out to the rest of the Bitcoin network. This process makes it possible to tell legitimate transactions apart from counterfeit ones.
Mining is also how new BTC appears in the world. Miners have to expend a lot of resources to do their job, so it is only natural that they get rewarded for the work that they do. They get paid in transaction fees and a portion of the crypto coins that they mined.
Bitcoin mining is an integral part of the coin’s ecosystem – and thus the people that perform it are rewarded handsomely with some BTC.
Is Bitcoin Profitable to Mine?
The short answer is “probably not.” The longer answer is “it depends on a lot of factors, such as the cost of electricity, the cost of Bitcoin ASICs, how popular Bitcoin is at the moment, how many other miners are also mining BTC, and so on”.
As you can see, there are quite a few factors that can impact the profitability of Bitcoin mining. Unfortunately, it becomes less and less lucrative to mine as time goes on. However, that doesn’t mean you should just give up on your dreams of becoming a Bitcoin miner – it can still be profitable in some cases.
Bitcoin mining in general won’t be that profitable for you if your electricity bills are higher than your projected profits and you aren’t prepared to dedicate a lot of resources to setting up your mining rig. Successful Bitcoin miners often rent out whole warehouses to start their mining operation in.
One more thing you need to consider is that BTC is not exactly doing super well right now – at least, at the time this article was written, the summer of 2022. Considering the amount of profit one can get while mining Bitcoin is directly tied to its price, that’s bad news for any prospective Bitcoin miners.
However, as we have mentioned above, there are still alternative ways to mine some BTC and end up profiting off of it. For example, you can dedicate some of the power of your mining rig to different, more lucrative cryptocurrencies. You can also opt for less costly Bitcoin mining strategies, such as cloud mining.
How Much Can You Earn Mining Bitcoin?
Bitcoin miners get rewarded for the work they do in BTC. The amount they get is called “block rewards”, and it is the same for every cluster of transactions – in 2009, that was 50 BTC. These rewards get cut in half every 4 years. Currently, it’s 6.25 BTC. This process is called a – you guessed it – Bitcoin halving.
Bitcoin’s block reward gets distributed every 10 minutes – but that doesn’t mean that you personally will be able to get those six and a quarter BTC that often. In practice, you will get a lot less. The exact amount of BTC you get will mainly depend on your computing power.
It’s quite easy to calculate how much you might earn from Bitcoin mining – you can just use one of the many mining calculators available for free online. However, before you can use one, you will first need to find out what the electricity costs are in your area, what mining equipment you will be using, and so on.
How to Mine Bitcoin
Now that we’ve taken a look at the basics of Bitcoin mining, let’s see how it can be done.
Luckily, the days of running your PC dry to mine Bitcoin are over – nowadays, there are many viable alternatives that can make BTC mining a much more profitable (and sustainable) affair. Namely, joining mining pools or signing up for a cloud mining service.
A popular alternative to solo mining is cloud mining.When you engage in this type of getting BTC, you rent some computing power from a company that runs Bitcoin mining operations for you. This has several advantages – first of all, you won’t have to worry about the upfront costs of buying and setting up your own mining rig. Secondly, you won’t have to pay for the electricity that the mining rig will use. Last but not least, you won’t have to worry about maintenance and upkeep fees for your mining equipment.
Of course, there are some downsides to cloud mining. For one, cloud mining contracts are usually signed for a fixed term, and you will have to pay for the entire duration of the contract upfront. This is a huge risk in a market as volatile as crypto – Bitcoin’s price might decline in the middle of your contract, leaving you with a loss.
You should beware of scammers when choosing a cloud mining platform. It’s important to choose a reputable and trustworthy company – otherwise, you could end up losing your money.
Bitcoin Mining Pools
Mining pools (unfortunately) have nothing to do with water; instead, they are groups of miners that pool their resources in order to increase their likelihood of completing blocks and earning rewards. When a new block is found, the rewards get distributed among the members of the pool in accordance with the amount of computing power they’ve spent.
This has several advantages – for one, it makes Bitcoin mining more affordable and accessible to people that don’t have the resources to set up their own mining operation. Secondly, it allows miners to spend less resources individually while still mining blocks with the same efficiency.
In return for becoming a member of a Bitcoin mining pool and contributing your computing power, you will be able to earn some of the rewards that the pool gets when a new block is found. Of course, you will still need to pay for the electricity that your mining rig uses – but your profits should be much higher than if you were mining alone.
There are many Bitcoin mining pools out there, so it’s important to choose one that is reputable and has a good track record. Some of the more popular ones include SlushPool and Antpool.
Once you have chosen a Bitcoin mining pool, you will need to set up an account and connect your mining rig to the pool. This process will vary depending on the pool you choose, but most of them will have detailed guidelines on their website.
Bitcoin Mining Equipment
Whether you choose to join a mining pool, have your own solo mining operation, or maybe even rent out your rig to others, you will need to purchase some equipment before you can actually begin to mine. It can be divided into two big groups: hardware and software.
Bitcoin Mining Hardware
The most important part of almost any Bitcoin mining process is hardware. This is the machine – or machines – that will actually do the work and mine BTC.
There are three main types of Bitcoin mining hardware: ASICs, FPGAs, and GPUs. ASICs are purpose-built devices that are designed specifically for Bitcoin mining. They are incredibly powerful and efficient, but they are also very expensive – often costing thousands of dollars.
FPGAs are another type of Bitcoin mining hardware. They are cheaper than ASICs, but are also not as powerful. GPUs, on the other hand, are much more affordable – and they can be used for other purposes as well, such as gaming or graphic design.
No matter what Bitcoin mining hardware you choose, it’s important to make sure that it is reliable and was made by a reputable brand. There are a lot of scammers out there, so be careful!
Here is our favorite Bitcoin mining hardware.
|Name||Hash Rate, Th/s||Power Consumption, W||Price|
|Antminer S19 Pro||110||3250||$4,900|
|Whatsminer M30 S++||112||3472||$4,400|
|AvalonMiner A1166 Pro||81||3400||$3,300|
Top Bitcoin Mining Software
Having hardware isn’t enough. To begin your mining journey, you will also need to get some Bitcoin mining software. It is an application that will direct the power of your mining rig. Software is basically hardware’s manager.
There is a wide variety of Bitcoin mining software apps out there. Some of the best include CGminer, Cudo Miner, EasyMiner, and BeMine, which is a great choice for cloud mining.
No matter which Bitcoin mining software you go with, it’s important to make sure that it is compatible with your mining hardware. Otherwise, it simply won’t work.
Bitcoin Mining Risks
Unfortunately, there are quite a lot of risks associated with Bitcoin mining. After all, there’s no such thing as risk-free profits or free money.
The first and main risk is related to Bitcoin being a cryptocurrency – its price is naturally volatile. If it crashes, you might have to sell any Bitcoin you mine at a loss. And if it goes up in price, you might not be able to cash out your Bitcoin right away since there will be less liquidity on exchanges and the network could become congested.
Another big risk is that Bitcoin mining is a very competitive industry. There are many people all over the world who are trying to mine Bitcoin, and the competition – and with it, mining difficulty – is only getting more intense. This means that it’s important to have the most efficient Bitcoin mining hardware and software possible, otherwise you will be at a disadvantage.
Lastly, there is always the possibility of whatever equipment you use to mine BTC becoming outdated. This is especially true for ASICs, which are purpose-built devices that can become obsolete quite quickly.
All of these risks can be mitigated, but it’s important to be aware of them before you start mining Bitcoin.
Is Bitcoin mining legal?
Yes, Bitcoin mining is legal in most countries. However, you should check your local laws before you start mining this digital currency: it’s possible it could be illegal where you live.
How does Bitcoin mining work?
Bitcoin mining involves powerful computers solving complex math puzzles in order to make the Bitcoin network secure. Bitcoin miners do not have to solve anything themselves: they just need to set up and maintain their rigs.
Is Bitcoin mining profitable?
Unfortunately, Bitcoin mining is rarely profitable these days, especially if you’re mining solo and don’t own a warehouse full of equipment.
How long will it take to mine 1 Bitcoin?
Technically, it takes around 10 minutes to get some Bitcoin – 6.25, to be precise. However, in practice, it usually takes a lot longer than that. The more computing power your rig has, the faster you will get that 1 BTC.
How much do Bitcoin miners make?
Bitcoin miners make around $20M per day. However, most of the profit goes to professionals that run industrial-scale mining operations.
How do I become a Bitcoin miner?
In order to begin mining Bitcoin, you will need a crypto wallet that supports this cryptocurrency, some mining hardware and software, and stable Internet connection.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.