You have probably heard the term of Bitcoin mining and people making a living from doing this operation, so what exactly is bitcoin mining and is it still profitable? Bitcoin mining is where you run a verification process for the blockchain network which validates user transaction making the transaction secure, in return for mining the miners will receive bitcoins. Due to the nature of GPU’s becoming quite expensive and electricity costs it can burden and make bitcoin mining difficult.
Things to consider if Bitcoin Mining is profitable for You
- Cost of electricity – This will be where a bulk of your costs will go as you need electricity to power your computer and your components, this can be offset if you are to use solar power or a wind farm however that will incur a steep cost to purchase but can be profitable in the long run.
- Computer Components – To mine bitcoin the computer components you will need are a motherboard, Power Supply Unit, Graphics Card, CPU and Storage. Due to bitcoin mining being quite popular the availability of these components that produce low electricity with high power can be quite expensive. For example, due to the Nividia RTX 3090 graphics card being a popular choice for bitcoin miners’ price has inflated the component to about $3,300 depending on the model.
- Popularity – If Bitcoin mining becomes even more popular where more miners enter the market this can cause a big problem for profitability as more miners will give you less tasks to complete resulting in less money, however due to Bitcoin being designed to only produce a certain number of coins every 10 mins that can also further dilute any profitability.
- Profitability – To determine if this venture will be profitable for you calculate all the costs associated above with the hash rate you are able to generate from mining, if you are breakeven for a few months based on your calculation you can see if it is worth the investment in the long run to be profitable.
Bitcoin Halving the Rewards for Mining
Every four years the number of bitcoins that are awarded to miners get halved as a way to control the supply of the bitcoins. Initially when Bitcoin was first released miners would receive 50 coins however over the years it has now halved all the way down to 6.25. So, keep in mind if you’re planning a long-term mining rig to consider the future implications of Bitcoin halving even more.
How To Calculate if this is a Profitable Venture
To calculate if this is profitable venture easily it is best to use a bitcoin mining calculator, for example Coin Warz has a great tool that can let you do this. All you have to do is put in how many Bitcoin hash rates you currently produce, the power consumption you produce daily and the electricity costs and pool maintenance fees. After inserting all this information, you will be given an amount of how much profit you will make daily minus expenses, this will give you an easy way to determine if it is worth mining on your current rig.
Bitcoin mining can still be profitable in 2021 given that you have the correct hardware and have completed an analysis to determine if you will be profitable in the long run or will just stay at break even. Do remember that Bitcoin mining is quite a costly investment where a steep start-up cost is involved however once up and running it is pretty much autopilot, just remember as Bitcoin’s reward system keeps halving so could your revenue.