Bitcoin Mining Background
As we all know, Bitcoin is the reward for miners for verifying their previous transactions. In order for this transaction to happen, Bitcoin mining needs to take place. This is achieved through a computer and a special piece of software. Both of which require an extensive amount of power when you consider the tough mathematical problems, which need to be deciphered in order to mine.
At the very outset of Bitcoin mining, miners were cryptography lovers and experts. However, as Cryptocurrencies have become more of a trend and a buzzword, with the additional temptation of being able to earn money from mining, more and more people have decided to take part in this new concept.
Warehouses and the necessary equipment to mine have been purchased by many increasing even further the need for extensive power.
Worth It Now?
In 2013, it most certainly was a profitable industry. But questions are now being asked as to whether these days it is actually worth the costs involved? The use of ASICs has made Bitcoin mining a whole lot easier however, the introduction of ASICs has also driven up costs and the amount of power required which are not positives.
Bitcoin mining is now in the midst of handling these negatives that are restricting the amount of profit available.
* Power costs – The amount of power required for Bitcoin mining and the high cost of that power makes it an expensive business
* It’s not easy – Bitcoin mining certainly is not any easy concept to understand and work out. Because of the way that Bitcoin mining is set up and the simple fact that there are only ever going to be 21 million Bitcoin, the reward for Bitcoin mining is reduced by 50% every four years. Added to this, large scale miners have the best technology and machinery, it is therefore a lot harder for the smaller enterprises to be able to take a chunk of the profit pie
* Unstable Bitcoin price – Bitcoin and the whole Cryptocurrency industry is very volatile at the best of times. So whenever the price of Bitcoin changes, this inherently affects the mining costs. In turn, this will have an adverse affect on the profit. It is far from predictable.
Whether Bitcoin mining will continue as we approach the big 21 million Bitcoin ceiling is yet to be seen. At the moment, many people are weighing up whether it is even worth mining at all because of the ever-increasing costs and completely changeable price of Bitcoin.
The future will certainly see more miners rely on greener energy both for ethical reasons as well as saving cost on expensive power. With alarming statements being announced about how just how much energy is required to produce one token is reason enough to look at other power sources. At the moment, it has been stated that Bitcoin is already consuming 0.15% of the world’s energy. This is a hard pill to swallow but also one, which highlights the emergency of the transfer to renewable energy. Although this may well be on the agenda, it has still has a way to go.