It seems like just yesterday when the Bitcoin mining trend was at an all-time high. Rushing to cash in on the trend, people would buy multiple high-end graphics cards which led to a global shortage in cards and other hardware.
Today, mining Bitcoin isn’t nearly as popular as it once was. What happened? Is mining Bitcoin no longer profitable? Or did people simply forget about it?
In this article, we’ll explore Bitcoin mining options, the technology, and whether or not it’s a viable venture to make extra cash.
Can You Still Mine Bitcoin in 2020?
Bitcoin mining equipment is more accessible, but it’s very difficult to earn a profit mining Bitcoin because mining rigs are expensive, the processing power demands are incredibly high, and Bitcoin’s hashrate is not slowing down.
You need more power to mine fewer coins, and the investment, in our opinion, is not worth it.
What is Bitcoin?
Since Bitcoin was created in 2009, the cryptocurrency has become the world’s most valuable. It was designed to be a peer-to-peer payment platform with no need for outside backing such as banks or governments. It’s a very interesting technology and new cryptocurrencies are emerging based on the original idea.
Bitcoin transactions are verified and stored on a platform called the Blockchain which is a global data storage service that anyone can view. The exact way Bitcoin works is rather complicated and involves complex algorithms, a subject for another time. What you need to know is that Bitcoin is highly valuable.
New Bitcoins are added to circulation by a process called Bitcoin mining which involves using computing power to solve mathematical equations. These equations are essentially designed to verify transactions, keep the market safe, and reward the miner for their work.
How Does Bitcoin Mining Work?
Bitcoin mining is a vital process to the whole blockchain network. In simple terms, Bitcoin miners use powerful computers to verify and catalog hundreds of thousands of transactions every day.
The data is organized into blocks, and every time a block is completed, a block reward is given to miners. The reward is a portion of Bitcoin, or a transaction fee, but the reward is halved every 210,000 blocks.
In other words, the more Bitcoin that’s mined, the harder it becomes to mine more, which is a way to keep the network safe and the currency valuable. Hashrate is used to measure the current power of the Bitcoin network. Every machine that is mining Bitcoin around the world contributes to the Hashrate.
Basically, the higher the hashrate, the more secure the network, and the more power is needed to mine new Bitcoins. Currently, Bitcoin has the highest hashrate of any cryptocurrency in the world, which means the Blockchain network is extremely secure, but also very difficult for new miners to earn from.
What You Need to Mine Bitcoin:
Even though the difficulty to mine a Bitcoin continues to increase, some people still manage to make a profit. What you need is a mining rig which is a device specifically built for the purpose of mining Bitcoin.
For the most part, there are two types of mining rigs: ASIC (Application Specific Integrated Circuit) and GPU (Graphics Processing Unit) based.
ASIC Mining Rig
These rigs act and even look like regular computers except the main focus is on power output, so they often have multiple GPUs. For this reason, the market for computer components almost crashed because of the mining craze, and ordinary components almost tripled in price.
ASIC rigs are the fastest and most energy efficient option, they’re generally the recommended option for miners. These are built for the sole purpose of mining one specific block-chain, you will need to buy a separate one for each cryptocurrency you plan to mine. While they’re much more expensive than GPU-based rigs, they can perform much better.
A typical GPU-based Bitcoin mining machine would have multiple GPUs, multiple power supplies, and several fans. These are often tied together to create a chain of rigs, which is often called a Bitcoin farm, resembling a data-center server, except much hotter.
GPU rigs are more accessible (there are more cards to choose from) but you do need a motherboard, CPU, RAM, and other components.
Another upside is you can use GPU based rigs to mine other tasks, or simply sell them to PC gamers, when you’re no longer interested in your venture. Mining with a PC on a high-end graphics card was once possible, but today the power requirements far exceed that of even the latest GPUs.
Bitcoin Mining Expenses:
Besides the initial investment needed for a mining machine, you will also need to factor in electricity costs. If you have a relatively powerful computer, you probably know how much electricity it can consume. These rigs need to run at full performance, day and night, for months, even years, straight.
As you might expect, the electricity required to run a Bitcoin mining rig can be astronomical. In most cases, the cost of electricity will cut into most, if not all, of the Bitcoin earnings. Of course, the cost of electricity will vary depending on your location and the season.
Labor & Maintenance:
Another expense would be labor and maintenance, the machines can burn out or crash, and will often need replacements. While some agencies will build a mining center for you, that’s a lot of cash out of pocket.
There are many other expenses too, and it’s not the same as calculating business expenses. The world of Bitcoin mining changes from day to day and the difficulty continues to increase too.
Bitcoin Mining Isn’t Worth It
Unfortunately, in our opinion, mining Bitcoin is not worth getting into at the moment. There are far too many expenses and there’s a very small chance you’ll earn a profit.
An alternative would be to mine other cryptocurrencies that have lower difficulty and are more accessible, such as Ethereum. Perhaps when Bitcoins hashrate lowers, and more miners drop out, mining will once again become a viable option. Until then, we think it’s best to avoid it for now.