“Have a high configuration desktop at home that you don’t use when you are at the office or on holiday or just outside the home? Make it a Bitcoin node and start mining Bitcoin!”
That was the attitude of most of the miners when Bitcoin mining started in 2009. At that time, with a multicore CPU and some decent specs, you could have earned a block reward of 50 BTC per block quite easily. Depending on the configuration of the machine, you could have earned USD 5 plus in a day which is good enough for a home miner who is just putting a spare machine to good use.
Those were the days when mining Bitcoin was just a hobby, and many people quit their jobs to become Bitcoin miners.
But that time is long gone!
Bitcoin mining is competitive: Miners all over the world compete among themselves to solve the mathematical puzzle to validate a transaction. Whoever does it first is rewarded. As number of Bitcoin miners is increasing day by day, the competition to solve the puzzle is also increasing. transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called Blockchain application development Technology.
Difficulty of the puzzle is increasing: Mining difficulty changes every 2016 blocks and the current network difficulty is 6,727,225,469,722 at the time of writing.
Reward Halving: The block reward is halved every 210,000 blocks. Considering it takes 10 minutes to form a Block of transactions, this is equivalent to 4 years. The first reward halving happened on November 28, 2012, when the block reward was reduced to 25 BTC per block from 50 BTC per block. In 2018, the block reward is 12.5 BTC.
These facts prove that Bitcoin mining is not as easy as it was almost a decade ago. However, if you consider below-mentioned points and act smartly, you can still make profits.
Cost of Hardware
You can’t do Bitcoin mining on ordinary computers anymore! There are specialized mining rigs produced commercially for it. Due to the increasing difficulty of mining, FPGAs (field-programmable gate arrays) were introduced in June 2011. These were programmed specifically for mining and consumed three times less power. Soon ASIC systems (application-specific integrated circuit) were introduced with which Bitcoin mining formally transformed into a commercial industry. Today, Bitcoin mining rig available from Ant miner and Avalon ranges from USD 500 to USD 3000.
It takes time to set up Bitcoin mining machines and maintain them. They may suffer from malfunctions and often need fan replacements since these rigs produce a lot of heat.
Know-how of the Bitcoin Machines
If you are setting up a Bitcoin mining rig, then you should be comfortable with running commands and using software. You may need to configure wiring and replacement parts. Large mining pools hire specialists to take care of these things for the machines running 24-hours a day.
The current network difficulty is 6,727,225,469,722 as of August, 2018. Based on the mining difficulty, you should consider the mining device that performs the right amount of hash rate execution (speed) to make your mining operation profitable. Device performance is measured in tera hashes for every calculation solved per second.
Mining consumes a lot of electricity. According to a study published in Joule, Bitcoin mining consumes 24 TWh of electricity annually, which is more than the whole country of Ireland. In order to get good ROI, miners must divide the hash execution performance by the number of electrical watts consumed. Also, it is advisable to use a green power source such as Solar, Hydro, or Geothermal that leaves less carbon footprint and is relatively cheaper. Electricity cost depends on where you live, so you need to do calculations accordingly. A lot of online calculators are available for this purpose.
Joining a Mining Pool
If you are joining the Bitcoin mining race today, it is logical to join an already established mining pool than to create your own, which may take years. There are few things to consider before joining a mining pool such as their method of distributing the block reward and the fees they charge for managing the pool. The older pools are considered to be safer. These pools also have professional customer care support and elaborate how-to-guide available on their website.
What if You Don’t Want to Invest in Buying Mining Machines?
If you don’t want to make the initial investment, you can opt for Cloud Bitcoin mining. Also known as cloud hashing, in this, the company owns a mining farm, full of mining hardware and it enables clients to purchase mining capacity or a certain amount of hash rate. Based on the amount of hashing power bought, you can earn a share of payments from the cloud mining company for the revenue generated utilizing your hashing power.
Bitcoin mining is not as lucrative as it used to be, but it can still earn you profits by putting in some efforts initially and endure the learning curve. Cloud mining comes without the initial investment, but returns are not as good as standard mining operations. You may start with cloud mining and after gaining experience, switch to the standard mining operation later.