Bitcoin mining was once a great way to generate a handsome income every month, but today, people aren’t too sure and are wondering if mining Bitcoin is still profitable.
The truth is, the mining landscape and requirements are not the same anymore. Professional players are now competing with individual miners and have created a whole new equation.
Yet, Bitcoin miners earned $53.15 million in revenues on December 8, 2021. As a result, it’s clear that mining Bitcoins does still have its rewards.
So, let’s take a look and see if you can profit from mining too!
The Costs of Bitcoin Mining
Earlier, you could mine Bitcoins comfortably with your laptop or desktop computer. They were enough to handle the processing power required to mine Bitcoins and individual miners could use their computers to mine, without any extra investment; all they had to pay was the electricity charges.
Today, you cannot use a regular computer to mine Bitcoins. You need special hardware to provide the computing power required to solve the hash problems. The process needs something called the application-specific integrated circuit (ASIC) chip and not a standard GPU.
These mining rigs can cost a few hundred dollars or even up to $10,000. As a result, you cannot rely on your home PC to mine Bitcoins anymore.
In addition, the mining rigs need substantial power to compute the mathematical problems. You could land up with a huge electricity bill if you don’t have access to cheap power.
So, it’s now difficult for individual miners to cover the costs of mining Bitcoins and unfortunately, the reward for mining Bitcoins is also decreasing gradually – you also have to keep that in mind for the long term.
Mining Farms are Competing Hard
The investment needed to mine Bitcoins is putting off individual miners. In their place, mining farms are coming up with robust infrastructure and required capital. They have numerous mining rigs and access to cheap commercial power as a competitive advantage.
As a result, mining farms now mine the majority of Bitcoins and earn the most rewards. Individual miners with limited capital cannot even think of owning such an infrastructure.
Additionally, the computing power needed to mine Bitcoins keeps on increasing with the mining difficulty. Therefore, you need to upgrade your hardware every 6 months or 1 year to keep generating profits.
That also adds to the cost of mining.
Bitcoin Mining Pools to the Rescue
The only way individual miners may profit from mining Bitcoins is to join a mining pool. In a pool, miners work together to mine Bitcoins using the combined computing power of each member. As a result, the pool can work as efficiently as mining farms to earn rewards.
Mining pools may have membership fees. Additionally, the earnings are shared equally between all the miners in the pool.
The last thing to consider is the price of Bitcoins. Your profits from mining are going to reduce if the value of Bitcoin declines, so, you should evaluate all the factors to determine if mining Bitcoins will be profitable for you.