The evolution of the cryptocurrency concept has led to the development of a whole new ecosystem in today’s modern economy. Digital coins require several supporting technologies that include the likes of blockchain and the internet, among others. Also, the role played by the internet of things (IoT) is also crucial in making sure that transactions happen at the desired pace and efficiency.
Bitcoin and Its Values
According to an estimate, a total of around 2,000 cryptocurrencies have been in existence today. Bitcoin is the leading cryptocurrency in the world with the highest market capitalization among all digital coins. It is also the very first digital coin that was invented, and only after its inception, the trend of digital coins gained momentum. Bitcoin has seen much dramatic change in its fortunes, with its value rising from $300 in 2015 to around $20,000 in December 2017 only to crash down to $3,500 on January 2019.
One of the important facets of Bitcoin is its mining process, which is quite a large industry in itself. Initially, the Bitcoin mining process was simple as it required one to solve some complex puzzles, and in exchange, the person would be rewarded with Bitcoin. That initial phase led to quick growth in Bitcoin mining as all it required was one o have a computing prowess.
However, fast forward to today’s scenario and the Bitcoin mining process has become complicated. It also requires more involvement, and given the fact that Bitcoin mining reward is halved every four years, it has a lot of implications for the digital coin and its market capitalization.
Veterans in the field of Bitcoin mining have made it difficult for new entrants to make the profit. One of the alternative strategies new miners have adopted is to join the mining pool of Bitcoin, but then you need to pay the fee, which will weigh on your profits. Some selected miners put off by competition also switched to mining other cryptocurrencies, but when it comes to the profit potential, there is no other alternative digital coin that can offer you as lucrative returns as Bitcoin.
Is Bitcoin Mining Still Profitable?
Investment in Bitcoin mining is still a profitable decision provided you take care of some of the key costs related to the process. First and foremost, you need to bear in mind that there is an initial investment that you cannot do away with. This investment relates to the setup costs you have to come up with a basic set up consisting of devices and the internet in addition to having access to graphic cards cost of which is usually on the higher side. You can easily set up a basic rig for crypto mining at around $3000 in case of ordinary digital coins through the Bitcoin mining setup that will require higher investment.
Another key cost associated with Bitcoin mining is the cost of electricity. Mining of the world’s largest cryptocurrency requires a lot of power, and you have to have your mining set up at a place where tariffs are low. Consider the estimate provided by the Marketwatch, which states that to mine a single Bitcoin, electricity worth of $3000 is required. This number is for the lowest cost scenario, and if you live in a state with a high electricity tariff, this cost will be around $6000. Now with the current Bitcoin value of $7,437, you can still make some profit. However, this scenario doesn’t cut the ice if we took the Bitcoin’s market value in January 2019 when it was hovering around $3,500.
One alternative strategy to ditch equipment and electricity costs is to switch to cloud mining. There are many companies such as HashFlare and Genesis Mining, which offer miners the facility to use their rig and equipment to do the mining in exchange for a monthly fee. The fee is dependent on the processing power that you have acquired, and this power is called the hash rate. The higher hash rate you opt more will be the charges though you will get more coins in exchange.
Bitcoin’s Value is the Key
It is very clear from the current valuation of Bitcoin that the investment in digital coin mining is still a profitable idea provided you get the basics right in terms of selecting the right set up, location, or cloud mining partner. Choose the low-cost electricity states as power is going to be one of the most resource-consuming input costs for Bitcoin mining. The option of cloud mining, on the other hand, makes sense in terms of flexibility and convenience though it might not be a very cost-effective measure if you want to remain in the cryptocurrency mining for a long time.