The Bitcoin Mining route to money-making
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There has been much interest in Bitcoin mining as a legitimate earning operation in the cryptocurrency space. After all, making your computer work while you sit back and earn money sounds like an amazing deal. But, can you really make money with Bitcoin mining hardware?
An overview of the Bitcoin mining process is worth touching on here. The whole purpose of Bitcoin mining is to verify transactions added to the blockchain. Nodes in the network compete to have the privilege of doing this by being the first to solve a complex mathematical problem. The successful node is then rewarded with a certain number of Bitcoins – the main way mining generates income.
With Bitcoin in particular, this process is very energy and processing intensive. With the way the consensus algorithm is structured, it must be to prevent fraud and abuse from any single node, since it is close to mathematically impossible for anyone node to always add transactions each time.
This however requires would be miners to use tremendous electricity and a powerful rig. With the rising cost of electricity and the significant capital required to put together a decent Bitcoin mining hardware rig, one can’t help but wonder if it is still worth it. Can you still make money from Bitcoin mining hardware? The short answer is, yes, of course. The long answer is that, it’s not as easy or lucrative as it used to be. But there are still ways.
How to mine bitcoin
The most obvious way is to mine Bitcoins yourself, or what is called as solo mining. While it is tremendously rewarding if you solve it yourself, the odds are stacked against you. With the network of miners growing, mining difficulty is also rising to adjust as per the algorithm’s design. Even if you have the most powerful rig possible, returns still won’t be as expected when viewed over time.
A second better way is to join mining pools. Mining pools are collections of nodes and Bitcoin hardware rigs that work together to arrive at a solution faster. By sharing their processing power with each other, it significantly raises the chances of successfully mining a block. The trade-off is that the rewards are also split among all the participating nodes, typically based on the amount of hashing (computing) power they have contributed.
While the rewards are smaller, they are somewhat more consistent, and over time this can translate to bigger earnings as opposed to if you went at it alone.
There are dozens of mining pools available online to choose from and picking the right one is crucial. Factors to watch out for include the reward method, how frequently the mining pool mines a block, stability and ease of withdrawal of funds, if you must. Some mining pools also charge a certain fee, so do your homework and crunch the numbers to see if this is something you can live with.
Third way to use all that Bitcoin mining hardware to earn is to not use it to mine Bitcoin at all! You can use that to mine a myriad of other cryptocurrencies or altcoins, some of which might be significantly more profitable in the long run by being more energy efficient compared to Bitcoin.
Some mining algorithms are also memory intensive while others are processor intensive, making mining two separate coins a possibility. This can potentially raise your income chances by giving you twice the probability of earning.
However you want to earn using your mining hardware, keep in mind to account all factors towards how profitable mining is for you. Of course, these include basics such as the cost of your rig, the hashing power you can generate, the reward per block generated and the mining difficulty.
But also don’t forget to compute for how much you need to pay for the electricity your hardware generates. Oftentimes, a seemingly profitable situation turns out to be losing money if electricity cost comes into play.
In the end, it is still and probably will always be possible to earn money through Bitcoin mining. The real question of course is how profitable it is for you, which is ultimately subjective.
Like any investment or income generating operation, it’s best to have multiple streams, and this cannot be overlooked. Combining mining with some other profit opportunities in the cryptocurrency space looks to be the best idea thus far.