5 Reasons That Bitcoin Mining is not as Profitable as Trading

5 Reasons That Bitcoin Mining is not as Profitable as Trading

Bitcoin mining refers to the method of earning Bitcoins through high-end computers that verify transactions via the blockchain. Such transactions offer security for this network and the network repays the miners with new Bitcoins. Miners will only stand to gain when prices of the Bitcoin go past their mining costs. As technological changes keep evolving, new mining data centers with huge computing power keep growing, and Bitcoin prices keep fluctuating, miners are asking themselves whether it is still profitable to mine Bitcoins, or is trading a better option.

Why is Bitcoin mining not as profitable as trading?

  1. Earlier, the advent of the Bitcoin was hailed as a “gold rush”. The Bitcoin was a decentralized peer-to-peer digital currency that not only offered borderless cash, faster transactions, but also outrageous profits. But, now mining demands the use of only high-end machines that are specially designed for the purpose. Those having under-powered rigs will not be able to get high payouts. So, mining on small scale is not lucrative unless you can get free or low-cost power supply. On the other hand, the automated bitcoin trading software applications increase the speed of trading bitcoin.
  2. Outdated mining hardware is a big problem affecting mining profitability. New hardware is coming out all the time and when you pre-order for such equipment, you have to consider that manufacturing, shipping, and customs delays can cost you a fortune.
  3. When Bitcoin prices surge, miners will not have fears about profitability, but when the prices fall and competition heightens, transaction fees take a plunge and this eats into the miners’ earnings. Many miners choose to keep their achiness turned off until prices rise again. So, chances are that miners are actually losing money through mining.
  4. Mining difficulty is measures as hashes per second and this difficulty level will change when more miners enter the scene. The Bitcoin network can only produce a fixed number of Bitcoins after every 10 minutes. With more miners, the difficulty will obviously go up and this means the demand for more energy. When difficulty level is higher, miners are less likely to solve complex cryptographic puzzles easily to earn Bitcoins. When the Bitcoin had been launched in 2009, the difficulty level was 1, but at the close of 2019, it has spiraled to 13 trillion.
  5. Finally, the network can only mine up to 21 million Bitcoins, and not any more. Bitcoin has a finite supply; there can be only 21 million Bitcoins. Till now, nearly 18 million Bitcoins have been mined. Every four years, the network “halves” the Bitcoin rewards that are given to successful miners. So, after the halving in 2020 the value will be 6.25 BTC. Since reward sizes are reducing as time passes, the difficulty levels will only increase.

To sum up, Bitcoin mining continues to be lucrative for some because nowadays getting sophisticated mining equipment like ASIC miners is easy. Hardware manufacturers have also introduced machines that can adapt easily; users are able to change their computer settings to low energy requirements to reduce overall expenses. Miners have to do a cost/benefit evaluation to see what their breakeven price is before investing in mining equipment. For this they must take into account power costs, efficiency of the system, the time spend for mining, and the value of Bitcoins. Miners can take the help of online mining profitability calculators to understand whether they can earn money through mining. Alternately, miners can always join mining pools where everyone contributes his hash power to increase chances of rewards. With increase in mining costs, most have now moved onto mining pools.

Also Read : Best 5 Databases for the company’s

webupdatesdaily

webupdatesdaily

WebUpdatesDaily is a global platform which shares the latest updates and news about all categories which include Technology, Business, Entertainment, Sports, etc and keeps the users up-to-date.

Leave a Reply

Your email address will not be published. Required fields are marked *