What Is Bitcoin Mining and Is It Still Profitable in 2019
Miley on October 7, 2019 As you may already know by now, Bitcoin is the very first cryptocurrency that started the era of digital money and blockchain technology. What’s more, Bitcoin became the only crypto with a high enough price to get people interested in mining it.
Although the price of Bitcoin has fluctuated dramatically over the last decade, many people are still hell-bent on obtaining it through mining, whereas others prefer to work the market in their favor investor-wise.
Today, almost 18 million Bitcoins have already been mined and there are only around 3 million left to go. However, the question remains as to whether or not mining Bitcoin is still profitable today as it was years back. That depends on a lot more factors than just the Bitcoin price, unfortunately. That being said, let’s look at what Bitcoin mining is and whether it will yield any profits today, shall we?
What is Bitcoin mining?
The Blockchain ledger is decentralized. That means that it requires hardware borrowed from other people using it in order for the ledger to execute mathematical equations and complex algorithms. These algorithms help verify and record transactions.
Borrowing hardware to the blockchain is called mining because anyone who participates in the mining process can compete to solve the equation and the first one to solve the complex equation wins and is rewarded with 12.5 Bitcoins, as well as transaction fees.
It seems simple enough but it’s far from it. Alone, you stand very little chance of winning, which is why people group up in so-called pools to increase their odds and share the prize. In order to participate, everyone must pay a fee, which varies from 1.5% to 3%. After that, the Bitcoin ledger uses a method called “Proof of Work” where every participant holds a copy of the ledger where transactions are recorded.
Profitability factors
As mentioned before, there are a lot of factors aside from the price of Bitcoin that determine whether your efforts will yield any profits or not. That said, here are some of the most important factors that should be considered when determining the profitability of mining.
- The price of hardware – Powerful hardware means more efficient mining. You can build your own rig or consider a pre-made and more affordable Bitcoin mining rig. Either way, you need to invest in ASIC (Application Specific Integrated Chip) grade hardware.
- The price of Bitcoin – This is a major factor, of course, especially since the price can drastically vary due to market volatility.
- Hash Rate – The rate at which your hardware is able to solve complex mathematical problems. The higher the rate, the more chances of solving the block problem and getting the reward.
- Competition – The more people participate in the mining pool, the higher the fees are.
- Difficulty – Each block that’s been solved opens up a new block which more difficult to solve than the previous one. What’s more, the more people participate in the block, the more complex the problems become since the network adjusts in accordance with it.
- The price of electricity – This is your highest overhead cost that can easily undermine your profits. The more efficient your hardware is, i.e. higher hash rate, the more power it consumes. Therefore, you must be extra careful when calculating per kW of electricity cost in your country. Know that powerful hardware consumes between 1500kW and 2000kW while being required to work 24/7.
Is mining worth it?
At the end of the day, deciding whether or not mining is still profitable in 2019 comes down to a lot of factors. For some people who are dedicated miners, the profits may outweigh the costs mainly because these miners calculate every step and every margin thoroughly. On the other hand, people who decide to mine casually can either get lucky or drown in expenses.
In retrospect, it’s pretty much down to personal preferences and experiences. However, when it comes to mining Bitcoins, there’s the fact that there are many companies and mining farms that are also interested in mining. In such cases, individual miners and even groups of miners can hardly compete against entire datacenters of mining hardware.
So, to answer the question, “Is mining Bitcoin still profitable in 2019?” The answer is probably not, but then again, it could be. It all comes down to determining each factor and calculating, as well as weighing both costs and profits. At this point, you should probably be able to find the answer for yourself based on what you want to do.
Due to the fact that there’s a finite number of Bitcoins left to be mined, people are eager to get their hands on them through mining. However, the fewer the Bitcoins are left, the more complicated it becomes to actually mine them. Even though Bitcoin still holds a high value on the crypto market, it seems that it’s only profitable to mine it to those who can afford to mine it, in the first place.
