How Profitable Is Bitcoin Mining?
The rising Bitcoin value has made more people interested in this cryptocurrency. Although there are almost 3,000 cryptocurrencies in circulation, Bitcoin is the most popular, followed by Ethereum and Litecoin. Bitcoin was the first cryptocurrency to be published, and this is partly the reason for its popularity.
Mining is one of the main ways of getting this cryptocurrency. However, you can buy Bitcoin on exchanges like Bitcoin Loophole. This platform facilitates the purchase and sale of Bitcoin for profit. For more information, you can visit Bitcoin Digital.
Nevertheless, buying Bitcoin is a simple process that gives you a fraction of this cryptocurrency. But, some people opt to mine Bitcoin. So, how profitable is bitcoin mining?
Bitcoin Mining Profitability
It’s easy to think that Bitcoin mining is a no-brainer. After all, you only set up your computer and start solving complex mathematical puzzles and get a Bitcoin reward for every correct transaction. Initially, Bitcoin miners earned their coins relatively quickly using their home computers.
But, this has changed as Bitcoin’s popularity increase. Today, mining Bitcoin is an involving and complex process. Bitcoin system halves the reward for every solved puzzle every four years. Additionally, serious miners have come up with different ways to mine Bitcoin. These are some of the things that have made Bitcoin mining difficult for small miners. Nevertheless, you can still join a mining pool to enhance your effectiveness. But, you will have to pay a fee, which might reduce your profits.
Essentially, the cost of setting up a Bitcoin mining system can be very high. That’s because it includes things like graphic cards, which can cost more than $700 per piece. A basic rig for mining cryptocurrencies can cost around $3000. In some cases, miners invest more than $10,000 in their mining rigs.
In addition to rig building, Bitcoin mining consumes a lot of electrical power. That means you will have high power bills that will reduce the profitability of your Bitcoin mining activity. For instance, the lowest amount you can spend on electricity to mine one Bitcoin can exceed $3,000. In places where electric rates are high, a single Bitcoin can cost upwards of $6,000 in electricity to mine.
Nevertheless, you could save money by setting up a less powerful Bitcoin mining rig. But even then, you would need time to recoup the original investment, leave alone making a profit.
If not ready to invest in a Bitcoin mining rig, you might consider cloud mining. Some companies charge miners based on a hash rate. A hash rate is a miner’s processing power. Miners that buy high has rates receive more Bitcoins. Thus, mining more Bitcoins with this option costs more.
However, this may depend on your chosen company. Some cloud mining companies charge a monthly fee, while others use the hash rate. In some cases, a cloud mining company asks clients to pay a maintenance fee.
Generally, cloud mining allows you to access another entity’s rig to get Bitcoin. But, this can also make Bitcoin mining less profitable due to the involved fees. Some cloud miners require clients to enter annual contracts, thereby locking them in. With such an option, the agreement could lock you will be locked in a rig that won’t make you any profit if the Bitcoin price drops.
Bitcoin mining is a high-risk investment. It entails setting up a costly mining rig and paying an upward of $3,000 in energy bills only to mine a single Bitcoin. And this doesn’t make sense for most people unless those who believe the Bitcoin price will someday surpass the $3,000 or $4,000 mark. For this reason, some individuals opt to invest in Bitcoin through trading rather than mining.
This article has been published in accordance with Socialnomics’ disclosure policy.