March 2018: How Profitable is Bitcoin Mining these days? Did you or I miss the boat? How can I make money by mining for bitcoins? People want to know: Is Bitcoin Mining Profitable in 2018 and beyond? Lets take a look now and see whats in store.
INVESTING IN BITCOIN MINING
Every investor looks to the options that will provide them with the maximum possible benefit and the least risks. If you are one that would rather “make” your own Bitcoin rather than fork out large amounts in buying them at market price, then there are basic things you need to know about the Bitcoin mining process which will help you gauge if you are truly ready to take on this venture or if you need to simply stick with buying the currency instead.
So what’s Bitcoin Mining?
The concept of mining Bitcoin was conceptualized to resemble that of gold miners out in the real world. First of all Bitcoin is a finite commodity by design, as there will only be 21 million Bitcoins to ever exist.
This limited nature in supply is the driving force that pushes its prices up all the time. Mining in essence is a process in which computers are deployed to solve huge mathematical puzzles at lightening speeds on the Bitcoin blockchain with the “chance” of being rewarded with Bitcoin at the end of solving the puzzle.
It is a game of chance in that like a gold mine it’s not all blocks that yield the desired reward, but having the fastest mining rig that can repeat the process countless times within a short span greatly increases your chances of actually getting it.
Is Bitcoin Mining Profitable with the Costs Involved?
As an investor your only goal is for your bitcoin mining operation to be profitable as such you need to be familiar with what your major bitcoin mining costs will emanate from. In a world which now sees industrial scale Bitcoin mining operations all over the world, your main cost will come from the following;
Mining Hardware:
In order to actually begin mining you need to be equipped with the specialized hardware that will actually produce the desired results. The days through which mining was done with your Desktop’s CPU are long gone, these are days in which huge industrial-scale mines take the lion share of the cake, as such if you want to get in on the game you need to buy the industry grade mining hardware to be able to compete.
A typical industry-grade ASIC mining hardware can cost anything from $10,000 to $30,000 per miner. A huge investment that you need to take time to carefully ponder before making your move as you might need tens if not hundreds of them to set up a profitable mining operation. So is bitcoin mining profitable to you at this price for equipment set up?
Electricity Costs:
Mining Bitcoin is a huge electricity consuming venture. As such your eye popping monthly bills must be readied for in order to keep operating. If your pockets are not deep enough, then it’s better not to start and get stuck midway.
Personnel Costs:
Bitcoin mining is a highly technical field that requires certain skills set. You will need to hire the right people to operate and maintain your mine. Most mining experts however will only accept Bitcoins as a salary, so consider this carefully.
As of 2018 mining has become the exclusive forte of industrial scale miners as smaller miners have been completely pushed out. The minimum costs for a marginally profitable Bitcoin mine is pegged at a minimum of $300,000 and is said to drastically increase to over $1.5 million before this decade runs out.
Which leads to the question, Is bitcoin mining profitable to you at these rates to get started effectively? Do you have deep pockets or investors on board? If so and you can scale up to the industrial mining model for bitcoin mining in 2018 requirements and beyond then maybe yes Bitcoin may be profitable to you.
Mining will only make sense if at the end of the day the amount you spent setting it up and running it is less than the value of the eventual amount of Bitcoin that is produced, so conduct your research carefully before setting your foot out.
CATEGORIES OF COINS ACCORDING TO MINING EQUIPMENT
The advent of Bitcoin created a brand new economy in 2009 which has since burgeoned into an industry that is worth hundreds of billions of dollars in market cap and sees trades of tens of billions of dollars every single day. Money now no longer is exclusively printed at central banks, as anyone with a computer, and access to the internet (in theory) can participate in the creating of their own wealth in the form of cryptocurrency,
The explosion in the use and popularity of these virtual coins, however, has created a race among those interested. The high bitcoin price makes bitcoin the undisputed king of this industry both in value and in the amount of computing power required to mine it.
It has become so much more incredibly hard to mine in the past few years that it is almost exclusively mined by industrial-scale mining outfits. So what are the different categories of coins that are mined, if any? This is what we are going to be covering in this next piece.
Principle Behind Investing in Bitcoin Mining
Mining of a cryptocurrency which was debuted by Bitcoin is a process where computers attached to specialized hardware are set to task, to continually solve a massive number of mathematical puzzles, with the chance of being rewarded in the form of one cryptocurrency or the other.
Mining is the process through which new coins are created, and it is also the safety net blockchains use in protecting their integrity. Miners on a particular network serve as the validators of all transactions in order to ensure everyone spends only what they genuinely have on the network. Then they potentially receive rewards for this service in blocks of bitcoins or other Cryptocurrency.
Categories of Coins According to Mining Hardware
Mining in the past few years has become extraordinarily popular among cryptocurrency enthusiasts due to the rapid appreciation of the value of coins in the industry. As of present, according to the hardware with which they are mined, there are three broad categories of cryptocurrencies:
CPU-Mined Cryptocurrencies
As the name implies these are cryptocurrencies that are mined using the central processing units on a Personal Computer or Mac. In principle, any cryptocurrency that is minable can be mined using the CPU of your computer, but due to high-level of competition and the later development of more powerful hardware for certain crypto assets, CPU mining is no longer profitable or even economical for those coins.
In the beginning, Bitcoin was easily mined using CPUs, and an old computer could mine as much as 100 Bitcoins in a day. One could still try mining Bitcoin today using their CPUs but the most likely outcome will be that it will not yield any results as the minimum hash rate needed to mine Bitcoin has gone drastically up making it only possible for industrial mining outfits to competitively participate.
CPU mining, however, is still very much alive as a lot of coins such as Bytecoin, Electroneum, and even Monero can all be mined using CPUs even today. Whereas Bitcoin mining solely relies on computational power for a successful operation, these other coins have been designed to be somewhat memory intensive, and because CPUs are versatile in their capabilities, they are still the better option for those trying to mine these cryptocurrencies.
GPU-Mined Cryptocurrencies
The adoption of Graphics Processing Units as mining hardware was the first sign of an arms race among cryptocurrency enthusiasts in the first days of the industry, When Bitcoin began increasing in value, and it became a tradable asset, GPUs which were much more powerful and consumed less energy in relation to their computational muscle were adopted to mine Bitcoin as well as the first altcoins in the industry such as Litecoin and Namecoin.
From being used in Artificial Intelligence, to gaming, and complex graphics rendering, GPUs were a highly versatile hardware that came to be tweaked in conjunction with software to mine various cryptocurrencies.
Although with time even GPUs became uncompetitive as far as mining Bitcoin is concerned, GPUs are still a prized asset in the cryptocurrency mining industry till date. In fact, GPUs can be said to be the dominantly use crypto mining equipment still to now, so much so that the only globally known manufacturers of it, NVIDIA and AMD are struggling to cope with the demand.
A great attribute of GPUs is that unlike other later generation mining hardware, a single GPU with the right algorithm and mining software attached can be tweaked to mine different coins. It is highly valuable when it retains its resale value as a graphics card. Coins such as Ethereum, Zcash, Monero, Bitcoin Gold, as well as hundreds of others are mined competitively with GPUs till this day.
In the case of Ethereum GPUs are almost the exclusive hardware used for mining it. Ether and all other Ethereum based coins were created using the Ethash algorithm which was designed to be resistant to ASIC miners. This coupled with the fact that unlike bitcoin Ethereum is a coin that is much more open to the possibility of change and updates in its source code, miners are very much reluctant to invest hundreds of millions developing any specific hardware for the coin only to become obsolete shortly afterward.
ASIC-Mined Cryptocurrencies
At around 2013, the first true nuclear arms race (in terms of cryptocurrencies) was born when the first ASIC miner for Bitcoin was released. ASIC (which stands for Application-Specific Integrated Circuit) is a microchip that is created specifically to mine a given cryptocurrency. ASICs are hardwired to the hash algorithm of a specific cryptocurrency such as Bitcoin for example. Once an ASIC is designed for a given coin, it cannot be used use for any other purpose than mining that specific coin.
What makes the research and creation of ASIC mining rigs is the fact that a typical ASIC miner can solve the mathematical puzzles required in the mining of a specific cryptocurrency over 100,000 times faster than the most powerful CPU. Also, ASIC miners when their sheer computational muscle is considered have the greatest hash power to power consumption efficiency. ASIC miners, however, are only created for a very limited number of coins, and Bitcoin is the most popular among them all, due to its high value and relatively sedentary source code, as its core developers have been very resistant to any kind of changes that could upset the status quo.
A powerful ASIC miner does not come cheap, as a typical ASIC miner that can economically mine Bitcoin can set you back to the tune of $3000. Due to their highly restricted nature, ASIC miners are quite disadvantageous, as they have little or no resale value, and could easily get obsolete whenever the next generation of ASICs are released which makes the previous versions uncompetitive.
Other downsides to ASIC miners is the fact that apart from shelling out on the hardware itself, a miner will need to invest in fans and other cooling equipment to keep the hardware running optimally. ASICs are extremely noisy as well and are not ideal to be kept at home for mining operations.
Investors’ Note: Is Investing in Bitcoin Mining Profitable
As explained in this piece, mining your cryptocurrency requires knowledge in the intricate matters that can either make your operation hit gold or go bust in the attempt. Depending on your investment power, and of course other logistical issues such as having a remote and secure mining site, you need to know exactly what you intend to get out of mining.
If you are a hobbyist trying to put their computers to full use, then your CPU can come in handy for mining crypto assets such as Electroneum and Bytecoin. There are Mining softwares such as the 1-click miner that allow you to use your PC to mine cryptocurrencies whenever you are not really using the computer. There are also Smart-Mining software that automatically detects when your computer is ideal and on power source not battery to begin mining coins such as Monero, and immediately cease whenever it detects you are active on the system or when it is using its battery power.
If you are a small scale investor that wants to mine cryptocurrencies from the comfort of your garage and mine them profitably, then your best bet is the GPU minable cryptocurrencies. GPUs are less noisy than ASICs and require relatively less cooling equipment.
GPU mined crypto assets also have a very reasonable hashing rate increase with time which means that your GPUs will be useful to you for quite a long time, or you can easily sell whenever you need to, and upgrade to more powerful variants to increase your firepower. If you are mining at home, however, you must note that there will be a considerable hike in your energy consumption and must take all measures to ensure any coins you successfully mine are kept safe and beyond the reach hackers.
If on the other hand, you are a big-time investor looking to create their own Bitcoin industrial farm, then one of your biggest worries should be finding a site where you will have an uninterrupted but very cheap source of energy.
Apart from the cost of hardware (which you must endeavor to get the most recent upgrades) energy is the next biggest consumer of funds in ASIC Bitcoin mining farms. Your mining operation will be incredibly noisy as such your mining farm must be located away from residential areas as much as possible.
Finding an effective means of cooling your hardware is also very important, as overheated bitcoin mining rigs can easily become permanently unusable. Lastly, your security as far as the mining rigs as well as your wallet for collecting any mined coins must be bank-grade, as there is no shortage of Bitcoin thieves on the prowl looking to hijack bitcoins or rigs outright breaking in to steal their hardware product.
Mining cryptocurrencies is very popular among those that want to own them but don’t want to pay the crazy amounts these digital assets go for these days. However, it is important to know that all mining operations are technically a game of chance, what greater computational power means is that you are able to multiply your tries over a short period of time, to stand a greater chance of actually getting the crypto assets as a reward.
SO is Bitcoin Mining Profitable for You?
Only you can decide. This article like all others is meant to raise issues and look at aspects of the process not to guide you in deciding yes or no. That decision is yours. What may be profitable today may not be tomorrow. Investment in Bitcoin Mining and Investing is at your own risk. This is not an endorsement for you to start mining. There are inherent risks just like any other investment and business start up. Bitcoin mining has been profitable for some in the past but wont be for all in the future. Happy Mining!
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