How can you tell if mining is a good fit for you?

It is very important to understand the continuously changing dynamics that affect the profitability of this investment especially before investing any of your hard-earned money. You have to ask yourself, would you simply be better of actually buying bitcoin vs mining it. However, you can generate passive income as long as you follow the right steps and aim at scale and investment. Let's discuss the factors that need to be considered before purchasing any mining hardware for Bitcoin in the sections below.

Initial Investment

When it comes to efficient builds, one of the main things that is probably making you hesitate is the initial investment. There is a good reason for that. Mining hardware can be very expensive. The expensive price of dedicated mining hardware Application-Specific Integrated Circuits also know as (ASICs) is the main reason why Bitcoin has become somewhat centralized in China. In case you didn't know, most operations are based in China these days, mainly due to inexpensive electricity costs and the vast computing power put out by these enormous facilities similar to data processing houses. (more on this later)Given how expensive ASICs is, many consumers don't have sufficient capital to invest in it to make it profitable which is why a mining calculator is so important, you need to figure out if you can get your operation to scale to make every day worthwhile in the BTC space. A lot of people ask us how many bitcoins can you mine in a day? There is no real-world answer for this, but every block reward itself is given every 15 mins so you can some what adjust for the day, but it is largely very expensive to build a profitable rig and I would not by my nature suggest it as the best directive, I prefer more liquid and evergreen investments.

Is Bitcoin Mining Still Profitable in 2020?

We have to use the calculators and based on our electricity cost come out as advantageous. The power cost has long been a reason for overseas mining to take place. With the decreasing block reward price for the Bitcoin Halving is going to likely play an important role. Lastly, you need to understand that hardware cost is also going to play an important role in whether or not you come to our ROI + on any of your mining endeavors.

This has resulted in large corporations operating mining farms that have thousands of ASICs. An average person generally cannot afford to buy even one ASIC let alone thousands. Rather than mining being spread across the world, there are fewer people controlling the validation process than what was anticipated initially when Bitcoin was first introduced. Apart from the impact that ASICs has had on Bitcoin, it is also very important to figure out your ROI timeline before investing. There is some hardware that may not pay itself off and end you in a net loss. Below are other factors that are mainly responsible for determining what your ROI per block reward period is.

You can use our calculator to determine what your projected earnings will be based on your electricity cost and the ASIC you will be using.

How Much Does it cost to mine 1 Bitcoin?

Each time a block gets validated, the individual who contributed the needed computational power is provided with a block reward which comes in the form of transaction fees and new-mined BTC. This means the price and targets are always changing depending on the difficulty level set in this computational blockchain!

The block time for Bitcoin is approximately 10 minutes. About every 10 minutes, a block gets verified and the miner is given a block reward. When Bitcoin was initially created, miners were given 50 BTC in exchange for verifying a lock. Every 210,000 blocks - approximately 4 years - the BTC amount in the block reward is halved. This is important in understanding hash rate and block reward timings.

50 BTC per block might appear to be high, however, it is very important to take into consideration that the Bitcoin price then was a lot lower than it is now. As the Bitcoin block reward keeps halving, it is predicted that Bitcoin value will increase due to the inherent levels of deflation as well as scarcity, two models which make the cryptocurrency and mining space itself invaluable, we still do not yet fully know the effects this will have on all modern industry. This trend has continued to be true so far.

First of all the newly minted BTC amount (often called coinbase, no, I know, it is not the same thing as Coinbase exchange) has been halved to 25 BTC, with the current coinbase reward set at 12.5 BTC as of 2019. There will eventually be a 21 million BTC circulating supply and no coinbase rewards any longer distributed to miners as rewards, the system by then is expected to stay profitable simply from transactions on keeping the leger and the miner fees.

If BTC is not minted any longer, then it won't be profitable, right? No, wrong.

Miners get issued transaction fees as an incentive to keep validating the network. Once the 21 million BTC is minted, the network's transaction volume will have theoretically significantly increased, while the profitability for miners will remain about the same due to these operational and transaction fees to incentive the nodes to keep the system secure and moving along smoothly.

Block rewards also directly affect your mining profitability, along with the BTC value. Given the fact that BTC value is volatile, that also means that block rewards vary. Also, confirming a block successfully is the only to generating any revenue at all.

What is Block Difficulty?

If you have connected the dots, most likely you will have realized that block rewards are very valuable. Look at the following:

Current BTC value (about $7,400) x 12.5 BTC = $92,500. Note: Currently the market is bearish - and block rewards are subject to change at all times.

If block rewards are so valuable, why isn't everybody purchasing ASICs?

It isn't easy to mine Bitcoin - that is the reason why millions of dollars are being invested in researching, developing, prototyping and selling specialized hardware.

Even if you were to purchase specialized mining ASIC, which may run thousands of dollars, there is only a slim chance that you will be able to validate a block successfully on your own.

ASICS have resulted in the difficulty of Bitcoin to skyrocket. Also, to validate a block, you are in competition with everybody else that is on the network. Those who have more computational power available will be more likely to be able to get a block validated.

As previously stated. large-scale operations have been set up by companies in China that contain thousands of ASCis running at the same time. They have a much higher chance of being able to confirm a block than you by yourself.

However, there are still ways for the small guy to earn profits. If you would like to start to mine Bitcoin, thinking about getting involved with a Bitcoin mining pool. You and other miners will be teaming up together to increase the amount of your combined hashing power, and therefore, increase the chance of being able to validate a block.

If your pool does validate a block, the block rewards are distributed based on the amount of your computational power contribution. So, for example, if you contributed 5% of the total hashing power, then you would receive 5% of the total block reward less the pool fees.

At first, pools might not appear to be very appealing since you have to share in the reward. However, they actually are a smart move to make, since they can significantly increase the chances of being able to validate a block. Otherwise, you could end up using a lot of electricity without being rewarded for the work you do.

Electricity Cost

When it comes to mining profitability, the factor that probably has the most impact is electricity cost.

The Bitcoin SHA-256 mining algorithm, after all, is classified as being Proof-of-Work (PoW) since work has to be done in order for the network to be validated. 'Work' refers to computational power - since electricity is needed for the network to be validated.

Always check the miner's power consumption/hash rate ratio. You ideally want to have an ASIC with low power consumption and high hash rate. This type of ASIC would be profitable and efficient since you would hopefully be validating a lock that was worth more than what your electricity expenses were.

If you do not end up validating a block successfully, you could end up having electricity expenses without earning anything on your investment. To maximize your profits, mine where electricity is inexpensive and buy the most efficient ASIC that you can.

Check out the Dragonmint T16 by Halong Mining for an outstanding BTC ASIC miner.

The average cost of electricity in the United States is about $0.12 cents per kilowatt-hour. Electricity costs vary in other countries. Asia has especially cheap electricity, and that is why many mining operations are located in China.

Conclusion

Bitcoin mining is highly competitive. If you are interested in mining Bitcoin as a way to generate a passive income, it is possible to do but you need to take the right steps.

To mine profitably, be sure to:

-Be patient

-Become a member of a mining pool

-Purchase the most efficient miner possible

-Mine using inexpensive electricity

You now have all of tool and information you need to make an informed decision. Bitcoin mining is highly competitive but also very rewarding. Als long as you purchase the right hardware and join with others to combine your hashing power, your chances of earning a profit will significantly increase.

May The Bear Forage Be With With You!