Bitcoin mining is the process by which cryptocurrency is put into circulation. To use Bitcoin, you should try to complete the “block” containing recent transactions. They are recorded in a digital register called blockchain. Once the block is completed, a certain amount of bitcoins will be given as a reward.
Blocks on the blockchain
The entire transaction history of bitcoins is recorded in a digital book called a blockchain. Since the blockchain is publicly available, anyone can access it. Data is stored on the network, so it is not subject to hacker attacks or central failures. Each record or series of records in a blockchain is called a block. It is sent to the network and added to the block chain after the network is accepted as a valid transmission.
Is it possible to earn significant funds on the Bitcoin farm? According to experts, it depends on how much you are willing to spend initially. At the same time, the profitability of bitcoin mining depends on many different factors.
In order to find out the prospects for earning, special calculators have been developed. They calculate various parameters, for example, the cost of electricity and your equipment, as well as other variables, and then, taking this into account, evaluate your forecasted profit (accordingly, they allow you to evaluate your possible earnings on cryptocurrency). Before exploring a brief example of how this is calculated, you should familiarize yourself with the main parameters.
Hash rate
Hash is a mathematical problem that a miner’s computer must solve. Hash speed is the speed at which these problems are resolved. The more miners-miners working in the Bitcoin network, the higher the level of Hash Rate. This value can also measure the performance of your Bitcoin mining farm. Today, Bitcoin miners (super-powerful computers) have different parameters. Their performance is indicated in MH / s (mega-hash per second), GH / s (giga), TH / s (terra), and even PH / s (Peta).
Bitcoins per block
Each time the above mathematical problem is solved, a certain amount of bitcoins is created. Their number per block began with 50 and gradually decreased by half, every 210,000 blocks (over four years). Until recently, the number of bitcoins received for each of them was 25. However, recently this figure has decreased by half, and the reward has been reduced to 12.5 bitcoins.
BTC Resistance
Since the Bitcoin network is designed to receive a certain number of bitcoins every ten minutes, the complexity of this task should increase in order to adapt to the increase in the Hash Rate network. In fact, it comes down to only one thing: the more miners joining mining, the more difficult it becomes to earn cryptocurrency.
Electricity Tariff
This is one of the main expenses in the mining process. The operation of a generating Bitcoin farm consumes a lot of electricity. You need to know your tariff in order to calculate profitability. This can usually be determined by your monthly electricity bill.
Power consumption
Each miner consumes a different amount of energy. Before calculating profitability, make sure that you know the parameters of your equipment. It can be easily found on the Internet. Power consumption is measured in Watts.
Pool fee
In order to get currency, you need to join the mining pool. This is a group of miners that combine to generate bitcoins more efficiently. The platform that unites them is called the mining pool and requires a certain fee for maintaining its activities. The pool controls the mining of bitcoins, and the income is distributed among the team members depending on how much work each miner performed.
Time interval
When calculating how profitable the Bitcoin farm is, you will need to determine the time frame. This means that the more time you use, the more cryptocurrencies you earn.
Profitability reduction per year
This is probably the most illusory and important variable of all. Its essence is that, since no one can really predict how miners join the network, it is impossible to predict how difficult this work will become in a few weeks, and even more so months or years. In fact, this is one of the main reasons because of which no one can ever guarantee whether mining bitcoins is profitable.
The second main reason is the conversion rate. The following is an example of how you can calculate the annual rate of return on profitability and evaluate seriously growing complexity from it. Based on these calculations, reviews about Bitcoin farms are built.
Conversion rate
Since no one knows what the future BTC / USD rate will be, it is difficult to predict whether mining bitcoins will be profitable. If you participate in the generation just to immediately spend what you earned, it does not cause great difficulties. But if you plan to convert earned bitcoins in the future into any other currency, this factor will be of great importance.
How to calculate profitability?
Today, one of the most advanced miner devices is Antminer S9. This is exactly what is known as an ASIC installation. It has a production rate of 14 TH / s. If you use a simple calculator for bitcoins, you will see that in this case you will earn about 1 MTC per month. But, of course, this calculation does not take into account the cost of equipment, electricity, payment for a pool, etc., which will inevitably be included in the costs of the Bitcoin farm. Step-by-step instructions for forecasting earnings require you to calculate all these data together. This can be done using the following statistics:
- 2% fees for the pool;
- 12.5 BTC as block reward;
- 14 times the hash frequency;
- 1375 watts of power consumption.
It turns out that in 12 months you will be able to get about $ 5,000. However, if you subtract the cost of equipment, this figure will be about $ 3400. Of course, this result may be different depending on the cost of your electricity, changes in the complexity of production and, most importantly, changes in the price of bitcoin. Thus, you will probably be able to get rich by mining cryptocurrency at home if you buy some heavy-duty equipment, while at the same time incurring very low energy costs. The performance and price of the farm for Bitcoin are seriously related, and you can not save on installations. Although cryptocurrency mining is a costly business, there is another option that may be appropriate for you. He will help get into the game at a lower rate.
How to get bitcoins with cloud mining
Not so long ago, a new concept called “cloud development” appeared. This means that you are not buying physical equipment, but rather leasing computing power from another company, and get paid depending on how much energy you can use. This looks like a very good idea, since you do not have all the problems with buying expensive equipment, its storage, cooling, etc.
However, when you make the calculation, it turns out that it is not very profitable in the long run. If you are offered unusually favorable terms, these are probably fraudulent offers.
If you want to try real cloud development in action, you can use Genesis Mining - today it is the only company providing online Bitcoin farm services that has existed for a long time and has managed to prove that its actions are not a scam.
So is Bitcoin mining profitable?
It is assumed that you can finally get profit from mining on a Bitcoin farm, but only if you invest a lot of money in a good mining station (for example, Antminer s9). If you do not have much money and a lot of time, then stay away from mining and just invest in the purchase of bitcoins with a long-term perspective.
Alternative to Bitcoins
Another option you might consider is developing Altcoin instead of Bitcoin. Today, hundreds of varieties of this cryptocurrency are available on the market, and some of them are still very easy to mine. The problem is that, since there are many species, it is difficult to say which ones are worth your time. According to expert reviews, the good categories of Altcoin are Litecoin, Dogecoin and Peercoin.