Note: I'm sharing this as I've been deep-diving into cryptocurrency and blockchain as my own self-learning and perhaps future investment?
Bitcoin mining gets more difficult over time, and so it now takes more electricity and money to mine for the cryptocurrency than ever before.
The rise of ether, another cryptocurrency, and the appreciation of bitcoin could help maintain the profitability of bitcoin mining, despite increasing costs and difficulty.
It's getting more difficult to mine bitcoins, but that doesn't mean miners are packing up their servers en masse and seeking greener pastures.
The number of bitcoins available for mining has decreased from 50 BTC per bitcoin "block" when the cryptocurrency first came onto the scene to 12.5 BTC per block, according to Autonomous NEXT, a financial technology analytics service. It is set to decrease to 6 BTC on June 19 2020, according to bitcoinblockhalf.com, a bitcoin countdown site.
Bitcoin mining is the process by which bitcoin "blocks" are unlocked. Miners are rewarded with blocks when they successfully solve complex algorithmic math problems using computer software. In order to control the supply of bitcoin, its underpinning technology was designed so that those math problems would get more difficult.
In the early days of the technology, people with a few computers were able to mine hundreds of coins in three to four days. That's not what the landscape looks like today, according to Sebastian Quinn-Watson, a consultant with Blockchain Global, a bitcoin mining firm.
"Today, about 1,700 bitcoins are generated a day," he said. "Basically, we are all fighting over one coin every 10 minutes."
"Since mining has become so much more difficult, it requires more electricity, and as a result, more money," Quinn-Watson said. His firm halted expansion of its Chinese bitcoin mining facilities eight months ago.
But Quinn-Watson thinks two factors could make up for a spike in cost and difficulty and sustain bitcoin miners moving forward.
"Ironically, the rise of ether is one trend that could help bitcoin miners," he said.
Ether, the bitcoin rival, which is powered by Ethereum blockchain, is up over 2,000% since last year. Up until June, the cryptocurrency was on track to surpass bitcoin as the world's largest cryptocurrency by market cap, according to Coindesk, but its share of the market has since pulled back.
"Many miners without the wherewithal to compete may completely shift over to mining ether tokens," Quinn-Watson said."Less participants means better economies of scale for firms that stay in."
Miners could also benefit from future appreciation in bitcoin's price, according to Quinn-Watson. If bitcoin's appreciation were to outpace the rise in the cost of mining, then the profitability of the business would be unaffected.
To be sure, bitcoin is up about 250% since last year, but it has recently experienced extreme swings in its price. Some miners have attributed this volatility to an ongoing civil war between crypto-power brokers over the future structure of the cryptocurrency.
This, however, doesn't bother Quinn-Watson. He told Business Insider volatility is exciting.
"It will make the system stronger and drive more growth," he said. "So we welcome the uncertainty and see this as necessary aftershock of the Cambrian explosion that is Blockchain."
IrHence, I started to explore avenues where I could possible mine some cryptocoins. I then chanced upon Minergate.
MinerGate is your gateway to mining CryptoCurrencies easily, quickly and with no hassle - you don't need to be an expert programmer - MinerGate will guide you through the process. Mining is an important part of any cryptocurrency’s ecosystem, it allows the maintenance of the network and it’s also a good way to use your computer to make money, but not everyone gets along with a command line terminal and not everyone can afford a powerful graphics card, so today we’re going to show you how to mine Ethereum and other Cryptocurrencies – the easy way!
No “Matrix” terminals, no complicated commands and parameters to set! All you need is a computer and an internet connection, MinerGate will do the rest for you, even if you don’t have a GPU!
MinerGate is a GUI miner (GUI just means it looks pretty) with its own incorporated multipool, and even though it’s an extremely intuitive tool, MinerGate’s cutting edge smart algorithm is always working in the background to make sure you’re getting the most out of your hardware.
MinerGate’s Variable Difficulty algorithm, allows small portions of the Ethereum Blocks to be sent to miners according to their equipment and effective hashrate, making Ethereum mining possible in any computer with a simple click of a mouse!
You might want try Minergate. It's free and while it won't promise you a fortune, at least you can convert your spare smartphone and laptop processing power to good use!
Or if you prefer to trade either Bitcoin or Ethereum, you might want to do so via an Etoro account instead.
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I am MrWildy and I am trying to journal more about my life and also my travels. Find out more about me here.