There have been discussions about cryptocurrency mining and questions about the best coin to mine. Currently, Bitcoin is the best coin to mine, and there are several reasons to back up this claim.
Bitcoin buying and mining
There are several ways to get Bitcoin but the major ways are through payment, purchase and mining.
Buying Bitcoin is a self explanatory and clear method. You just have to purchase your required amount and pay via an exchange of your choice. With buying Bitcoin, no investment is involved and you do not have to spend money getting servers.
With the help of a mining rig and some powerful computers, you can successfully mine various coins and make so much money. Mining Bitcoin means that the Bitcoin is registered on the blockchain after being verified. It takes up to 10 minutes for a mining network to confirm a block and generate the reward attached. You can get up to 6.25 BTC rewards per block.
The first method of getting Bitcoin was buying and this method is still in play till today. When you want to get Bitcoin, you buy at the current market price. Depending on the way the market goes, you can sell for profit or loss. Check out different exchanges to buy Bitcoin for a good price.
When the mining of Bitcoin came to play, mining became a competitive game. You could easily carry out the activity on your PC (Personal Computer). But as its popularity increased and more miners found their way to the network, mining became tasking, and personal computers could no longer carry out the task without the presence of more formidable hardware.
If you want to become a Bitcoin miner, your personal computer with a better hardware component could be a good start. With your PC, you can access mining software affiliated with Bitcoin. You could also be a part of any mining pool and relate to a bunch of miners with the ability to combine power and get in competition with huge mining farms of ASIC.
The whole process sounds like so much work, but the reward makes everything worth it. If you love cryptocurrency and you have a love for sophisticated hardware, mining Bitcoin would be fun for you. But you should note that powerful hardware and energy efficiency translates to a more profitable mining experience for you.
The reward given to miners serves as an incentive and motivation. This means individuals will be willing to take part in the mining purpose, which is after the monitoring and legitimization of all transactions of Bitcoin. All these are to foster the validity of Bitcoin.
Since the price of Bitcoin dropped from 69,000 dollars which was it’s all-time high, it has been challenging to mine cryptocurrency. Miners maintained their motivation and zeal. Production has increased, and Bitcoin mining has become expensive.
Bitcoin buying and mining profitability
Many individuals have doubts about the profit one can realize from Bitcoin. A simple way to profit from Bitcoin is by purchasing it from an exchange and hodling. On the other hand, it is possible to make more profit from mining Bitcoin if you mine efficiently.
Buying Bitcoin is cheaper and profitable. You can hold the coin and watch the value increase before selling at a good price. Buying, holding and investing your Bitcoin is a great thing to do. The pros outweigh the cons if you think about it.
On the other hand, mining Bitcoin can be profitable only if you have enough funds to invest in the hardware, computers, and other mining equipment. You could break even with an efficient mining system in no time.
Just like physical assets such as gold and silver are profitable, Bitcoin mining is profitable. In Bitcoin mining, its profitability comes from the high cost of assets. When the prices of assets increase, miners could be less efficient and still make much money.
When the transaction fees and rewards for mining are more than the mining cost, Bitcoin mining is profitable. This is much more complicated than meets the eye due to the economics and cost-determinant mechanics.
Analyzing the profitability of Bitcoin is better done by evaluating the behavior of miners with respect to the varying nature of costs. If miners sell BTC at a low price, it is easy to say that costs are high. Miners depend on the appreciating nature of BTC since they are the best hodler. A miner will only sell BTC if there is a cost to cover. Mining and accumulation of BTC are done in the bear cycle, while selling is done in the bull cycle.
Reasons for its profitability
Now that you know how profitable Bitcoin has become, let us look at the reasons for Bitcoin’s profitability:
This is the first reason why Bitcoin mining is still profitable. Your profit depends mainly on the kind of hardware you use in mining. There are several kinds of hardware these days; choosing the best manufacturer assures profitability. Hardware price varies, so pick the one that best suit you. Prices depend on the energy the machine uses and its production of computing power.
In Bitcoin Mining, your computing power determines how much Bitcoin you will be able to mine. If your machine consumes low energy, monthly costs will be low. For this reason, miners are advised to think carefully about a machine’s longevity and profitability when deciding which machine to invest in for Bitcoin mining.
The cost of hosting, watts used by the machine per TH, and the cost per TH of the machine tell the profitability of BTC mining. However, the life span of the machine is based on its quality of production. Buying cheap machines comes with a cost as they might seem efficient, but there is a possibility of breaking down.
If you are lucky to get a low hosting cost, you must prioritize the cost per TH over the watts per TH. This is so that the loss in the machine’s efficiency will be made up of low operational expenses. The same will be the case if you have high hosting costs.
An excellent way to weigh your machine is to think about how much BTC would fall before your machine loses its profitability. You want a machine that can stay relevant and profitable for many years and keeps earning you more Bitcoin than you would get from purchasing it. As an individual miner, you can only compete with high-end machines with cheap electricity by taking your machine to a mining farm. You might not get this service on every farm, so research before you do so.
This is another reason why Bitcoin mining is profitable. The cost of electricity varies; some countries charge low, while others charge higher. However, countries consider economic growth when dealing with industrial electricity. This means that you would pay higher when mining at home if you stayed in the U.S but pay lower for electricity in Russia if you have a mining farm.
You want to get a machine that would sync with your electricity cost to avoid spending so much on light bills. At the start of your mining activity, you might be running at a loss due to the electricity cost, but over time, it will be profitable. Also, miners in the US are looking towards flare gas that is squandered at oil sites. It would be more profitable and cheaper if you could get that energy as a miner. Note that if you are mining from home, you are sure to lose funds.
This reason for profitability is most times overlooked. After mining your Bitcoin, you would have to pay some fees when it is time to sell. As a small or lone miner, you might want to sell your Bitcoin on Binance, Kraken, or any other retail exchange. There are times you would experience low fees, and times it would get high. This depends on the order book state and the structure of the fee you meet on the exchange.
As an expert miner, you have deals that are to your advantage. Deals with desks to sell off your Bitcoins at almost no cost, but it is dependent on the market state. There are miners that paid a lot and over the spot price during sales.
Whatever the case, expert miners are large-scale Bitcoin dealers who get more leverage that can bring them good deals. These deals go beyond the cost of electricity.
The cost of mining is an important reason for the profitability of mining Bitcoin. Mining at home is not as blissful as it used to be; hence, mining rigs are needed. These rigs are somewhat sophisticated and need a dedicated facility. This facility would not be easy to acquire. You could build from scratch or even rent from a partner; no matter the route you take, expenses will be incurred.
After getting your mining facility, you will experience the profit of mining Bitcoin. Through hosted mining, you will experience the profitability of Bitcoin mining. Note that extra cost will be put into setting up your facility, especially if you are located close to residential areas. In the absence of a cooling mechanism, you must install a cooling system in your rig. The cooling system will prevent overheating.
Sophisticated hardware and machines are needed for efficient mining as well as insurance and security. The amount spent setting up your mining rig will be worth it when you eventually start mining Bitcoin.
If you have stable financial means as a miner, consider getting an ASIC miner. The miner comes with various costs that cannot be avoided, such as cooling and electricity. You can purchase a new one for about twenty thousand dollars or get a used one that has been upgraded from miners. Bitcoin mining profitability can be seen in the cost of the mining facility.
When you decide to go solo in your mining activity, costs and rewards will be consistent and inconsistent, respectively. To ensure reconciliation between cost and rewards, mining pools came on board. Revenues are gotten when a block is mined, and solo mining will not help you achieve this in time. To solve this problem and push for profitability, mining pools were introduced.
Small-scale or solo miners are better off joining a mining pool where hash rates can be aggregated and used for mining blocks more than usual. The profitability of BTC mining is more evident here as revenues are distributed among miners according to their contributed hash rate.
There are various mining programs for you to pick from and also mining pools open to you. The two famous mining programs are BFGMiner and CGMiner. The two oldest mining pools – F2Pool and Slush Pool. F2Pool is among the largest mining pools that support up to 15% of the whole Bitcoin network.
Before you join a mining pool, consider the pool’s fee, as that influences the profitability of mining. The fee could be up to 4%. Profitability is very evident here, considering the size of the pool. If the total hash rate is high, the pool will discover a block frequently, and returns will be consistent.
An enterprise’s reputation is crucial; hence you must look into the reputation of the pool and some other services available before joining. You can look for a mobile app, payout customization, API, and monitoring, among others. You must also get information about their payout rewards, additional fees, and other relevant information. You can never go wrong with the information, and joining a pool increases your chances of getting rewarded.
The Bitcoin mining industry has been on for a while now, but there are some standards that should be met when you get a mining rig. These days getting a faulty mining rig is very common. The machines in this rig might need some servicing, repairs, or a peculiar temperature condition.
In this situation, you would be caught between a replacement or buying new parts. Even though it can be tiring to opt for repairs, a new purchase is out of the question as it does not focus on maintenance. Due to machine downtime, you would incur more costs than you would from machine maintenance.
Maintenance is necessary to keep your rig running and hashing because if the rig is offline, your machine will not hash, and you will make no earnings. Bitcoin mining is profitable when you have standby technicians to attend to your rig anytime. This is advised if you have significant operations or plans on turning your operations into large ones.