Bitcoin mining is one of the most popular topics in the world of cryptocurrency, with people seeking ways to earn Bitcoin paying heed to cost analyses to decide whether Bitcoin mining is even worth it in 2018.
Back in 2013, Bitcoin mining was a significantly lucrative and community-fostering initiative. However, now the tables have turned since the launch of ASICs, which have made Bitcoin mining simpler but more expensive and energy-consuming. This has, in turn, resulted in issues pertaining to Bitcoin mining. So, let us take a look at the main issues forcing us to question the profitability of Bitcoin mining nowadays.
1. High power costs
One of the main factors that affects the cost of Bitcoin mining is the high price of electricity. Since cryptocurrency mining is a power-hungry endeavor, your power bill will be high. So, if you live in a place where power rates are high, then you’re at the negative end.
As per Bitcoinist, the electricity charges for mining one Bitcoin are over $500 in low-priced states. In the states that have high electric rates, people can spend over $26,000 in power bills to mine one Bitcoin. In such a case, you can check if you can make use of industrial electricity in a legal way since it is usually inexpensive or “free”.
2. Difficulty in mining Bitcoins
When it comes to Bitcoin, the mining reward is halved every 4 years. Large-scale miners have powerful mining hardware, which makes it more difficult for smaller outfits to mine Bitcoins, even if they decide to join a Bitcoin mining pool in an attempt to be more efficient, since they have to pay fees which in turn diminish their profits. Owing to this, miners decide to go for other cryptocurrencies, such as Ether, Litecoin, Zcash, Monero, etc. but these cryptos have very little value against the U.S. dollar.
3. The volatility of Bitcoin price
The cost of Bitcoin also impacts its mining. Since the price of Bitcoin and its overall mining expenses remain closely associated, mining profitability is affected significantly. Bitcoin miners may receive less profit in return for their hashing power when the Bitcoin price plummets, then gain more as the price augments. Thus, the value of Bitcoin should be high enough to let the miners at least break even after paying their electricity bills.
Mining can prove to be extremely profitable or it can result in a financial crisis. Even by following the complex history of Bitcoin mining, you can find out that it mainly relies on cryptomarket trends, the introduction of advanced mining equipment, and development of effective power systems, which can make Bitcoin mining easier as well as more lucrative.
Miners can also turn to renewable energy sources for earning Bitcoins. This will make it more affordable and have less of an impact on the environment.