The current value of one bitcoin sits at around $8,550. In the past year, the value of bitcoin has been shown to be quite volatile. So, many investors may be hesitant to invest their own money in this cryptocurrency. Fortunately, through mining, you can earn bitcoin with minimal investment. Here’s what you need to know about this still-profitable revenue source.How Does Bitcoin Mining Work?
In order to validate transactions involving bitcoin, there need to be people with the appropriate computing power to run verifications. These bitcoin miners receive bitcoin in exchange for their efforts. If the cost of mining is less than the bitcoin value, then the miners will make a profit. These days, there are mining centers featuring unparalleled computing power, but there is still money to be made by individuals with the right setup.
Prior to 2013 and the invention of application specific integrated circuit (ASIC) chips, personal computers could be used easily to mine bitcoin. However, ASICs made bitcoin mining 100x easier. With the introduction of ASICs, individuals had to compete with the computer power of large mining centers. The rising difficulty of mining, high energy costs of running equipment, and the cost of buying the computing equipment all chipped away at profits.
How to Determine if Bitcoin Mining Will Be Profitable for You
Some individuals may still be able to make money bitcoin mining. You can more easily obtain equipment nowadays and there is wider availability of efficiency machines, such as ones that let you lower energy requirements (and therefore, overall costs.) Before jumping into bitcoin mining, you should do a cost/benefit analysis. For this analysis, you need to know bitcoin’s value in an official currency, the time you plan to spend mining, how many watts your system consumes, and your electricity costs.
Various sites offer free profitability calculators. It’s worth running the numbers on several bitcoin mining profitability calculators since they can vary in complexity. You will want to determine the breakeven price at which bitcoin must be worth in order for mining to be profitable for you. If the price is realistic, then it may be worth investing in the equipment to start mining.
The bottom line is that bitcoin mining is an excellent way to take advantage of a lucrative and volatile market. As prices rise, mining becomes more difficult as more miners compete for fewer bitcoins.
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