Bitcoin mining attracts many people, including those who are inexperienced in this field and want to enter the world of cryptocurrencies without making large investments.
However, the problem is that it is virtually impossible to mine Bitcoin without making a small investment.
In fact, let’s be honest, it’s possible to try mining Bitcoin with low-cost equipment, but it’s virtually impossible to see any results. The real risk is that you end up spending money on energy costs with little or no return.
Things will change only if you are willing to invest a little.
bitcoin mining
Bitcoin mining is the process of creating something new. $BTC The transaction is verified and added to the blockchain. In other words, a blockchain is a ledger that contains all valid transactions.
Therefore, mining Bitcoin means participating in this process, which can be done basically in three ways.
The first, more complex option is to equip a very powerful mining rig to independently attempt to verify blocks and collect rewards.
The second option, which is quite complex but simpler than the first, is to equip a medium-low power setup and provide that computing power to a mining group (called a pool).
Third, although not recommended, is to invest your money in so-called cloud mining.
The goal is the same. For each block, the task is to find a unique hash that validates it so that you can add the block to the blockchain and receive a reward.
This hash changes from block to block, so finding it requires generating billions of hashes every second and verifying each one is actually the correct one.
Approximately every 10 minutes, a new block is mined and the process starts over.
first method
Note right away that successfully mining Bitcoin on its own generally requires a large setup.
In fact, it is theoretically possible to search for hashes on any size rig, even with manual calculations. The problem is that Bitcoin mining is competitive and only one miner who finds a hash is rewarded, and the more computing power there is, the more likely it is to find a hash.
Therefore, someone with limited computing power will find it nearly impossible to independently discover even a single hash confirming a single block. This means that anyone with minimal computing power will essentially have to choose the second option, unless they are extremely lucky.
The problem is that mining is a very energy-intensive activity, and the more hashes extracted, the more likely it is to find a good hash and receive a reward, so it ends up being a race to reward those who consume the most power.
So if you mine Bitcoin with a very low chance of being able to find a hash that validates a block, you’ll end up using more power, incurring a lot of costs, and getting nothing in return.
Creating a high-power Bitcoin mining facility that can mine alone requires a large investment and can only be undertaken by well-funded companies. Suffice it to say that in many cases, $1 million is not enough to have a real chance of achieving tangible and significant results.
Second method
Mining pools were created in the past to address this issue.
These are organized groups of miners, often open to anyone who wishes to join, pooling computing power with other group members to form what formally appears to be one large miner, but is actually made up of many smaller miners who combine their powers.
Although this method greatly increases the chance of successfully extracting the correct hash, it also has dramatic drawbacks.
In fact, the reward is given to only one miner and only once for each block. Therefore, in the case of a mining pool, if a device of any of the group members is able to find a hash that confirms a block, the pool collects the reward and redistributes it to all members in proportion to the computing power provided.
So even in this scenario, those with more computing power earn more, but those with less computing power often receive a much smaller portion of the compensation that doesn’t cover their expenses.
third way
In theory, cloud mining involves borrowing computing power provided by a third party, eliminating the need to use your own mining hardware.
The problem is that people who claim to provide cloud mining services often lie with the express purpose of deceiving the inexperienced.
In fact, the service is paid upfront and there is no guarantee of earnings at all. This means that after collecting the money, many of those who claim to provide this service probably do not provide anything to the paying users, thus saving them even their electricity bills. In the end, users receive nothing other than the money they sent to the scammer.
Honestly, there are genuine cloud mining services, but they work differently. Sure, it’s possible to borrow computing power from a data center equipped for Bitcoin mining, but then the machines would need to be configured remotely and independently to run correctly and competitively. In other words, only experienced users can successfully use it.
How Bitcoin mining works
To mine Bitcoin, you must own and operate hardware that can run the SHA-256 algorithm that powers Bitcoin’s Proof-of-Work.
So initially, these machines must be purchased or leased, installed, properly configured, and running.
These machines cost several thousand euros each, but one is generally not enough as the computing power is too low compared to large facilities with hundreds or thousands of machines.
Once the machine is started, it starts randomly mining a large number of hashes per second to find something to validate a new block. When someone finds it, that block is added to the blockchain, verified, and moves on to the next block.
Every time someone validates a block, you receive a reward in return. Its reward is currently 3.125. $BTCHowever, it halves approximately every four years.
Solutions accessible to everyone
For individual users, the main options are to use ASIC miners or cloud mining.
An ASIC (Application Specific Integrated Circuit) is a device designed solely for mining a specific algorithm, such as SHA-256. These are the only effective option for mining Bitcoin as they offer high hashrate with highly optimized energy consumption.
Purchasing ASICs is best done through a trusted retailer, usually a website that specializes in selling these machines.
As already mentioned, the first issue is cost. Powerful ASICs are required and can cost thousands of dollars.
The second issue is configuration. Setting it up correctly and efficiently is never easy.
On the other hand, joining a mining pool is very easy, but choosing the best mining pool requires some knowledge about the sector. Additionally, the optimal mining pool will change over time, but fortunately switching from one mining pool to another is relatively easy and quick.
Unfortunately, this is not the end. Optimizing efficiency, especially as machines become obsolete (usually within a few years) and need to be replaced.
So this is not a solution for everyone, but at least for those who have a few thousand dollars invested and a good understanding of how to configure and optimize these machines.
Mining without owning hardware
In theory, there are alternatives that are truly available to almost everyone.
However, as we have highlighted before, cloud mining is often a scam.
In theory, cloud mining allows you to rent hashrate from remote data centers, thus avoiding the costs of purchasing and maintaining hardware.
To be honest, there are legitimate cloud mining platforms, but they are quite few compared to the hundreds or thousands of scam platforms.
Generally, scammers operating in this particular field promise high profits and do not require any effort from the user. On the other hand, legitimate platforms do not promise any revenue and, most importantly, inform users that they need to configure the rented computing power after payment.
profitability
A decisive factor in the profitability of Bitcoin mining is the cost, especially the operating costs due to the huge power consumption.
For example, a used entry-level ASIC costs about $1,000, while a new one can easily cost more than $2,000. However, these are machines with relatively low computing power.
Your electricity bill would be about $10 a day, or a little less, so your monthly bill would be about $300, and over the course of a year it could be more than $3,500.
It must be remembered that high energy consumption also generates a large amount of heat, so these machines often need to be cooled.
Cooling equipment costs hundreds of euros and consumes a lot of electricity.
The problem is that this method will only bring you a little more than $10 per day, so it’s ultimately not worth the effort. In other words, it is better to buy $BTC Rather than mining with such profitability in mind, when prices are low.
In fact, profitability varies greatly depending on market value. $BTCBecause there is definitely Bitcoin mining income. $BTCbut its market value can fluctuate widely and very quickly.
