Bitcoin Mining is the process of using specialized computer hardware to earn Bitcoin. The annual production of Bitcoin via mining is $3.5 Billion dollars, with most of that Bitcoin going to Bitcoin miners. As miners earn rewards in Bitcoin, their profits can change greatly on market conditions – making Bitcoin mining a high risk / high reward industry. Anyone can join the Bitcoin network and become a miner. In fact originally Bitcoin can be mined on all personal computers and commonly available hardware. However, in 2020, specialized hardware called Application Specific Integrated Circuits (ASICs). These machines mine Bitcoin at a very efficiency.
Bitcoin is now a household name. For an invention that is just over a decade old, this is certainly remarkable. A mysterious entity by the name Satoshi Nakamoto launched Bitcoin in 2008 as an alternative to central bank currency. Bitcoin mining is an alternative to obtaining Bitcoin on top cryptocurrency exchanges. Miners often sell Bitcoin on Over-the-Counter brokers to generate passive income.
Learn more about Bitcoin with our simple guide for beginners.
Decentralization is a central tenet of Bitcoin. Essentially, no single person controls either the issue or functioning of Bitcoin. This system can, therefore operate and transfer funds from one account to another without centralized control.
Centralized control of a financial system is pretty easy. How then, does a decentralized ecosystem like Bitcoin work? The important question therefore is; how does the ledger automatically update transactions without giving either entity power to control to entire blockchain?
How Bitcoin Mining Works
The basic feature of Bitcoin is the open-source nature of the Bitcoin protocol. This means that anyone can access and update the Bitcoin code. Similarly, anyone can update the Bitcoin ledger of transactions. All that needs to be done is for your computer to guess a random number that solves an equation from the system.
The more powerful your computer is, the more guesses it can make per second. Accordingly, having a powerful computer exponentially increases your chances of “guessing right”. This allows you to add the next “block” of bitcoin transactions to the existing chain.
A more complicated representation is as follows. On the one hand, you have your miner that makes “guesses”. If your mining equipment makes the right guess, you get the right to add the next block of transactions to the blockchain. The block you create is sent to other computers so that they can validate it. At the same time, other computers in the network validate the block and update their copies of the Bitcoin blockchain. More computing power translates to greater frequency of making the right guesses. However, in line with natural rules of probability, it is virtually impossible for one computer to get it right all the time.
This process is what Bitcoin mining entails in a nutshell. Computers compete to add the next block and in the process generate new blockchain which automatically goes into the network. The computer that solves the block earns a “block reward” and some transaction fees on the transactions entered into the blockchain. Uniquely, the process of validation is automatic and does not rely on centralized control. Miners can decide to hold the bitcoin they create or trade it to other bitcoin community members.
Bitcoin Mining Hardware
In order to profitably mine Bitcoin, you’ll need specialized hardware called ASICs. These machines are designed to specifically mine Bitcoin’s SHA256 algorithm – in essence they only do one thing but do it well.
Perhaps, you are thinking, if it’s that straightforward, what makes Bitcoin valuable? Well, Satoshi Nakamoto in anticipation of this made mining difficulty increase as computing power increased. The mining difficulty automatically adjusts to the increase in cumulative network computing power as more miners get involved.
The reason for this is to keep Bitcoin inflation in check. See, if there is a steady stream of Bitcoin, it is easier to have stable rollout process. When Bitcoin was first launched, you could profitably mine Bitcoin using a personal home CPU. As Bitcoin became more popular, miners moved to GPU (Graphics processing Units) to carry out more calculations. A GPU can enhance a computer’s computing power to the equivalent of 30 regular PCs.
Later, ASICs (Application Specific Integrated Circuits) came about. These were hardware equipment specifically to mine Bitcoin. Currently, they represent the gold standard in Bitcoin mining equipment and have occasional updates themselves. These ASICs have a higher “hash rate”, measured in hashes per second. Hash rate is the number of “guesses” the device can make per second. Consequently, the higher the hash rate, the higher the chance of earning bitcoins.
Check out our video below to learn more about Bitcoin mining devices!
Even with top of the line mining equipment, the current mining landscape is incredibly competitive for individual miners. This has given rise to mining pools where miners combine computing power to compete effectively. If the pool successfully adds a block to the public chain, the pool spreads the reward among its members.
Currently, about a dozen large mining pools dominate Bitcoin mining. Mining pools charge you pool fees for participating which is something that can affect your profitability.
Top Bitcoin Mining Pools
There are 2 factors to consider when picking a Bitcoin mining pool – the location of the pool and it’s market share. The top priority would be location – the closer the pool is to you geographically the better. This is because sometimes due to network latency, shares that are mined could be “stale” – as new blocks are created rendering older blocks obsolete. It’s also important to know that Chinese servers are behind the Great Firewall of China, meaning that connections could periodically break. This means that choosing a server with low latency and close geographical location would give the highest yield.
The second factor is the market share of the pool. The larger the market share, the more consistent the rewards. This is because blocks are continuously mined by the pool, and hence they can pay out at a consistent rate. This reduces the impact of the randomness of block creation.
We recommend finding a pool close to your location with a high market share.
Electricity is a major factor in Bitcoin mining. Bitcoin mining is certainly an electricity-intensive affair. This is because ASIC rigs have high computing power which the process of mining Bitcoin requires.
The high power consumption is in both powering the miner and cooling the machines which get really hot. This is why mining farms have cropped up in cold areas like Iceland to take advantage of natural cooling.
So, Is Mining Profitable?
This is a question that needs perspective. Mining on a personal PC is definitely not going to be profitable. This is because simple computers simply cannot compete with ASIC rigs and mining pools in terms of making more “guesses”.
So, the more computers you have and the faster your computer is- the greater your chances of generating the correct number and earning Bitcoin. Thus some people have entire farms of expensive computers to increase their chances.
Currently, the block reward is 12.5 BTC for every block mined. Thus, you can only profitably mine Bitcoin with sophisticated equipment. Bitcoin mining farms are popular mining method to gain some of the block reward. Block rewards are set to half in 2020, reducing the mining rewards by 50%. This event is known as the “Bitcoin Halvening“. The current estimated date for the Halving is 13th of May 2020, after which the block reward will decrease from 12.5 to 6.25 bitcoin per block.
One more obvious factor as to whether mining is profitable is the price of Bitcoin at any given time. Miners need to balance this with the expense of mining Bitcoin itself.
Bitcoin Network Hashrate
The Bitcoin Network Hashrate is currently above 120,000,000 TH/s. This means that if the hashrate of the network is coming for Antminer s17 (currently most popular type of Bitcoin ASIC), it would require 2.1 Million units. This would consume 5.4 Billion Watts of electricity, which is enough to power a small city! Mining rewards are split according to hashpower, with larger miners getting a high proportion of the daily Bitcoin mining reward.
In summary, the following are factors which affect the profitability of mining Bitcoin:
- Block reward;
- Mining difficulty;
- Power consumption;
- Pool fees; and
- Bitcoin’s price at any given moment.
Bitcoin mining is, therefore, a complicated task.
However, investing significantly in a large mining pool is the most efficient way to go about it. The current circumstances make individual mining simply a waste of time when done on a small scale.
Nonetheless, it is still an activity that many investors have a significant stake in. The reality, however, is that the task will get progressively difficult with time and a select few with significant hashing power and cheap electricity will thrive.
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No gambling, casinos etc. Please communicate the price for a published article. We look forward to cooperation!
Tell me please, do you accept casino or gambling links?
“For nothing is secret that will not be revealed, nor anything hidden that will not be known and come to light” Jesus, Luke 8:17
Please just hear me out, this is 1 min read and will cost you nothing!
(And if you are filtering this information from/for your boss, please let him or her decide, you are not wasting their time, let them decide. It’s that important).
Dear CEO/Owner of “boxmining”,
I am an independent researcher that has discovered a mathematical model that predicts the price at which BITCOIN’S blow off top high for this current bull move should occur, this is not a scam, and I am not trying to scam you.
The model’s accuracy for the last 2 spike highs in 2013 and 2017 is undeniable, and predicted the absolute spike highs with an over 99% accuracy. It’s that significant, and a bold claim I know.
It’s arguably the Rosetta Stone for understanding what Bitcoins future value is, this in many ways is an enigma, which has an encryption but also a predictable and reliable mathematical sequence.
Additionally, when you understand the peak high of Bitcoin the Bitcoin/Gold ratio also makes sense possibly well over >1:150 for this current bull move.
Based on its previous track record, the model predicts a “concrete” fixed price within a small deviation at which time this current bull run should come to an end, before the next multi year bear market starts.
You can view a heavily redacted version of the model at this link:
(PLEASE NOTE: if your browser just offers a download, please try another browser, a 16 page pdf should appear).
The model predicted price high for 2013: $1,239.43
Actual 2013 high Mt Gox $1,241.92, Cryptocompare.com, 99.79% accurate
The model predicted price high for 2017: $20,038.41
Actual 2017 high $20,088.99 Coinmarketcap.com, 99.63% accurate
The model also predicts that at a price of just over $71K, a corrective pullback to AT LEAST the
$57K range will happen, over -20%.
PRICE PREDICTION FOR INITIAL/INTERIM PULLBACK (please allow a +/- 2% deviation)
BRAVE NEW COIN BLX $71,924
The model then predicts a price high for the CURRENT bull run: *$xxx,xxx (see price list)
Yes, this research will cost something.
PRICE LIST OPTIONS:
1) To receive the spike high price prediction for the current bull run, and the E-report with heavy redactions, (so you won’t be able to view the math). Cost 0.1 of a bitcoin
2) To have the complete unredacted, 16 page E-report of the math with model predictions for this current bull run and estimates for the post 4th halving (as data is not yet available). Cost 10 Bitcoins. Of course, if the math for the 2013, 2017 and current** bull run spike high projections are proven to be nonexistent or intentionally deceptive a full return of the coins will be given.
3) If after you have purchased the complete E-report (cost 10 Bitcoins), and you have an Archimedes EUREKA! moment as I did, and want to stop the distribution of this information (until the 4th halving block 840,000, in this case I will sign a non disclosure form) Cost 90 Bitcoins.
4) To purchase the complete copywrite without a time limit, I essentially hand the model over for ever, (in this case I will sign a non disclosure form with no time limit, and transfer over copyright ownership). Cost 300 Bitcoins.
If this is of interest to you, and I am sure it will be just after the predicted interim price of just over $71K has been achieved, and then a subsequent pullback to at least the $57K range, then please send me a return email, indicating your degree of interest.
Dean M Jephson
No guarantee is made for this model, for future results and/or future price predictions. Any investment decision you make on past performance or future predictions are your responsibility. You and you alone are responsible for your own investment decisions. Any loss due to information interpreted or acted upon in this model, is completely your decision. Neither I nor any of my representatives are to be held responsible for any loss suffered, by any decisions acted upon or not acted upon, due to this model, or any future price predictions due to losses suffered because of this model.
**In regards to the math interpretation for this current bull run cycle, no guarantees can be given for future projections. However, if the math formula is proven to be nonexistent or deceptive a full refund will also be given. The model predicts price NOT times or dates
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