Blockchain is a decentralized ledger that records a transaction in the form of a block over the online network chain. By solving a complex mathematical problem, a miner adds an individual block to the blockchain in the Bitcoin network. This requires huge computational and electrical power. One out of many competing miners is able to successfully add a block to the network chain. In return, the miner is rewarded Bitcoins (subject to reduction by half every four years).
By 2021, Bitcoin has already become a member of the trillion-dollar asset class and still rising. Awareness about Bitcoin mining and the benefits of joining the blockchain community is on the rise too. However, mining is an overall expensive process. You would need advanced computer hardware and software to carry out mining. Besides, power requirements for continuous operation and ventilation requirements are additional cost-bearing parameters. Due to this reason, many crypto participants opt to trade currency over the blockchain medium using apps like Bitcoin Trader.
Bitcoin mining: Profitable or not?
The complexity of the network and halving in number have increased the dilemma to invest in Bitcoin mining, as an activity, or not. According to Coinbase statistics, miners’ revenues are 50% higher than the 2017 peak, $60 million a month! However, this is the total income received by private miners and large data centers and organizations. The shares are distributed according to the factors that determine the share of crypto mining profit:
Hash Rate
It is the total power to compute from all the mining devices connected over the network. Therefore, the more powerful the device, the greater is the mining efficiency. Not every private miner would be able to afford an expensive equipment rig, and therefore, these are generally feasible for a large organization.
Network Difficulty
It is an indicator of the difficulty level to mine Bitcoin over the network. To mine the same number of blocks, more computing power is needed to match the difficulty level. This resits the blockchain from attacks like ransomware and malware. The difficulty increases proportionately with the hash rate, commonly for everyone.
Block Reward
It is the reward that each miner receives in return for every successful mining activity, and subsequently creating a new block along the network chain. While initially, the block reward was 50 BTC, thereafter, this was reduced by half after every 210,000 blocks. (Since the block time to build a block is 10 minutes, it is reduced to half every four years). This is algorithm-based, and therefore, the current block reward is 6.25 BTC. This keeps a check on inflation and increases the value of each coin.
Electricity cost
It is one of the major factors that determine mining income. It is primarily dependent on the location. You would have to weigh the benefits in terms of expenditure for electricity costs to find out if the mining activity is profitable enough for you or not!
Cost of equipment
As the Bitcoin price rose, so did the cost of equipment. The cost of each WhatsMiner M31 S 66TH/s rose from $2,250 to $5,000, while it would need approximately 416 days, with a $12 per day profit to recoup this cost. These parameters- hardware, software, and logistics have to be constantly weighed against each other to make an informed decision as to the profitability of Bitcoin mining.
Conclusion
According to News Spy Review, the value and popularity of blockchain are on the constant rise, so is Bitcoin. Even though the crypto markets are volatile, and uncertain in their nature, Bitcoin is speculated to grow brighter in the future. Blockchain technology has and will revolutionize almost every sphere of commerce; therefore, it is expected that the rewards will also be fruitful.
