Cryptocurrency mining has been one of the most controversial issues in recent years, since it is difficult to understand how the process carried out by multiple computers can generate profits for those who practice it. The fact is, it's not just about solving whole mathematical equations. Mining Bitcoins it goes much further, and then I will explain it all to you.
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What is mining Bitcoins or cryptocurrencies?
Basically, cryptocurrency or Bitcoin mining is a process that is carried out with the use of different computer equipment; initially it was just about computers, over the months GPUs were used, then ASICs, and over the years, while mining difficulty increased, specialized equipment began to be developed; better known as miners.
It should be noted that the purpose of these teams is simple. Only they have to use their computing power, also called hashing, to solve calculations and equations on the blockchain of a specific cryptocurrency; which in this case would be Bitcoin. However, beyond that, they also try to add transaction records, which are given the name of blocks, and when they complete a block they are rewarded with tokens.
It is worth noting that mining Bitcoins can be quite attractive for the rewards, since in case of validating a block you can get up to 6,25 BTC; which is equivalent to a little over 200.000 US dollars.
What do you need to mine Bitcoins?
Mining Bitcoins nowadays requires something more than the intentions to do it, although it is a process that can be done through a computer, doing it that way is not profitable in any sense. Thus, cryptocurrency mining experts often employ specialized equipment, where they stand out:
- ASICs.
- High power power supplies.
- cooling systems.
In addition to this, it is important have a stable Internet connection, specialized software and very basic knowledge in programming. It should be noted that ASICs are equipment with state-of-the-art microchips that are responsible for solving the complex mathematical equations of the network.
These ASICs must be powered by a power supply; Previously, computer power supplies were used, but other alternatives are now used. In addition, due to the high and complex work that these teams do, it is normal for them to reach quite high temperatures, which is why they also require a cooling system to prevent them from deteriorating due to high temperatures.
Types of mining
Bitcoin mining can be done in various ways, although the most common and used for its high profitability margin is through ASICs, it can also be done through Cloud Mining, staking and using GPUs.
1. Cloud mining
This way of mining Bitcoins has always been considered "risky", however, andIt is widely used by people who want to enter this world, but who do not have the necessary investment capital to purchase specialized hardware.
It consists of paying a cloud service to a mining company, which will be in charge of assigning you a hash power depending on the membership you have paid for; Based on this, your profit percentage will also vary. It should be noted that it is an excellent way to avoid even the costs of electricity or Internet. However, the percentage of profits will not be as high as if you were mining with ASICs.
2. Strike
Staking, also known as PoS or Proof of Stake, is a form of mining that consists of delegating your tokens to a blockchain to receive a reward in return. This delegation can also be known as “blocking funds”, and its purpose is to benefit the security of a blockchain.
To stake, you must choose a cryptocurrency that has this protocol, and it is also essential to have a minimum number of tokens to start the stake. Regarding the rewards, it is worth saying that these will vary depending on the number of tokens that have been blocked in the blockchain, but some projects offer up to 15% APY, which is quite profitable if many tokens are locked.
3. GPU Mining
Cryptocurrency mining with GPUs is one of the most profitable among the mentioned, but no more than mining with ASICs. Since this consists of using the hash power that GPUs possess, we can also call them as graphics or video cards.
This power will be used to solve the mathematical equations that the network demands, and although this method is not as profitable in Bitcoin, other networks such as Ethereum and Dogecoin do take full advantage of them. It is also important to know that depending on the generation of the GPU, your hash rate could be higher or lower. Therefore, when mining with GPUs it is recommended to acquire the most modern ones.
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Is it really profitable to mine Bitcoins?
Mining Bitcoins can be profitable, but many factors must be taken into account. These could decrease or increase your chances of earning money with cryptocurrencies, in addition, a key point will also be the budget that you want to use for mining. Since, the more money can be invested in specialized equipment, the returns will be greater and greater.
If you want to calculate if it is profitable for you or not, you need to evaluate the hash power of the mining equipment you want to buy, subtract the costs of electricity, internet and cooling. It is worth noting that one of the most powerful miners in the industry is the Bitmain Antminer S9; This has a power of 12,93 TH/s, which means that it produces an average of 0,5 BTC per month, which at its current price is equivalent to a little less than 20.000 dollars per month.
In the example we speak of only 1 team. Therefore, in case of acquiring several ASICs of this range, the rewards will be multiplied. However, consider the points that we mentioned, in addition, we suggest you use some of the internet calculators to get more detailed results, and among them we recommend:
Countries in which it is profitable to mine Bitcoins
As we mentioned above, profitability when mining Bitcoins can vary for many reasons. This means that there are countries in which mining is more favorable or profitable, since they have better temperatures for the activity, much lower electricity and Internet costs or even favorable laws for those who wish to perform mining.
It should be noted that among some of the most profitable countries to mine Bitcoins we find:
- Venezuela: despite being the country with the highest inflation globally, we can say that It is a paradise for Bitcoin miners. Since, although they have long power outages, their prices are quite low, as are Internet rates. Not to mention that the president of that country has established pro-cryptocurrency policies.
- Iceland: For those looking to save on refrigeration, Iceland may be the best option. Because, its cold climates that vary between -1° and 12° are very favorable for keeping ASICs in good condition. This has caused that in recent years mining activity has increased almost double. Nor can we omit that they have fairly low electricity costs, ranging from $0,07KW/h.
- United States: In the United States you can find the main Bitcoin mining companies, and it is not surprising, since they have diversity of electricity prices, acceptable climates for the task, and almost no regulations or policies that restrict the activity in the various states of the nation.
- Iran: Although Iran may be on the verge of starting a financial crisis, this is one of the countries with the most miners. Since, the KW/h prices are quite low (ranging from $0,05 to $0,03), and furthermore, the government does not limit those who carry out the activity; in fact they consider mining as an industrial activity.
In addition to this, in a recent study carried out by Arcane Researh, they found that the most profitable countries to mine Bitcoins are well distributed around the world. Therefore, regardless of the continent you are in, traveling to one of those countries with investment plans would not be so expensive, especially since there is at least 1 for each continent.
What to keep in mind when mining Bitcoins?
Before you start mining Bitcoins, you must investigate if in your country it is legal to do this activity. Since, some nations tend to restrict this activity; as China did during the past year. Also, let's remember that it is a business, so investing money will be key to obtaining profitability. As well as these points, there are other prudential aspects to consider, such as:
- If you are going to mine Bitcoin you must pay taxes, but this varies depending on the country in which you are located. Investigate this point well before starting to calculate if it will be profitable for you.
- You can use your computer to mine, but you will instantly realize that it is not profitable at all, and that it can also be harmful to its components in the long term.
- You can mine from your home, but you will have to prepare a space for it; especially if you will buy ASICs. Because, these usually cause a fairly loud noise, similar to the centrifuge of a clothes washer.
- Internet connection must be stable and constant; a fall or cut in the network will generate losses.
final conclusion
Defining exactly with one word if it is profitable to mine Bitcoins is difficult. Nevertheless, we can say that «SI» is totally profitable; If this were not the case, large companies would not invest millions of dollars in equipment. to get BTC tokens. However, if a person with a low budget who plans to use his PC to integrate into mining, we can suggest that he does not do it, since it will not be profitable for him in any aspect. Therefore, it is concluded that For mining to be profitable, it is necessary to invest in ASICs., in order to start seeing profits immediately.