Bitcoin is worth nearly $1 trillion (total market cap). It’s the next big thing, and you know you have to get on board. Is mining the way to go?
You’ve heard that mining is no longer profitable, but you want to know for sure before investing your time and energy into it.
Lucky for you, this blog post will tell you everything there is to know about mining Bitcoin in 2022! What it is, how it works, and why you’re probably better off just investing. Let’s go!
What is Bitcoin?
Satoshi Nakamoto invented Bitcoin, a cryptocurrency and payment system. Cryptography verifies transactions and keeps track of them on a public ledger known as a blockchain. Bitcoin was the first digital currency and has a limited quantity of 21 million coins, so we call it digital gold. That’s also where mining gets its name.
What is Bitcoin Mining?
Mining Bitcoins is the process of authenticating Bitcoin transactions and securing the blockchain. Anyone can become a miner by donating their computing power to processing and confirming transactions on the Bitcoin network. The more computational power you donate, the better chance you can earn Bitcoins through mining blocks and receive payment for your contribution.
Bitcoin mining works through a ‘Proof of Work’ model, where the work is solving complex math problems.
This may seem very difficult, but it’s not as bad as it sounds. In fact, with the proper hardware, anyone can dive into Bitcoin mining and have a chance of being profitable.
How Do You Start Mining Bitcoin?
Here’s what you need to start mining Bitcoin yourself:
- A computer with a processor that can handle mining (CPU or GPU)
- Bitcoin mining software
- An account with a Bitcoin mining pool (optional)
- A wallet to store your mined Bitcoins in
What is a Bitcoin Mining Pool?
Most people don’t have the computing power to mine Bitcoins on their own, so they join a Bitcoin mining pool. A pool is a group of miners who work together to solve blocks and share the rewards. The more computing power you contribute, the higher your chances of earning mined Bitcoin.
How Much Can You Make Mining Bitcoins?
Bitcoin is mined in units called “blocks.” As of October 2017, the reward for mining a block was 12.5 Bitcoins. That means every time a miner solves a block, they earn 12.5 Bitcoins. However, that reward is halved every 210,000 blocks, or about four years. So, in 2022, the reward for mining a block will be 6.25 Bitcoins.
How Many Blocks are There?
There are currently about 16 million blocks in the blockchain, which means only 4 million Bitcoins are left to mine until Bitcoin mining ends. The last one is expected to be mined around 2140. Each time a block is solved, 1080 additional blocks are created to incentivize the miner who found the solution.
This makes it much harder for someone else to solve that block, and even harder for someone else to solve the next one. Once all 21 million coins have been mined, there will never be another Bitcoin generated.
Should You Mine Bitcoin?
All that said, mining is not for everyone. It can be very costly to invest in the equipment and space needed for mining, which eats into your profit margins the whole time. Bitcoin mining is also challenging work — it’s not as simple as pressing a button or even typing some Bitcoin code on an online interface. Transaction fees, electricity costs — they can all cut into your bottom line.
Here are some of the costs associated with mining:
- Hardware. Equipment that can run mining software and process the equations quickly and efficiently costs money. This can run into thousands of dollars for a high-powered computer.
- Electricity. Bitcoin mining creates a lot of heat, so you’ll have to spend some cash on cooling equipment to prevent your mining rig from overheating and shutting down.
- Space. You’ll also need somewhere secure to house your mining rig(s). That’s not cheap either. Considering how expensive it is to mine a single coin, space is at a premium in the crypto world. Homebrew Bitcoin miners often have their entire basements filled with mining equipment.
Is Bitcoin Mining Profitable?
For the average person, no, it’s not profitable. If you have access to some powerful hardware and are willing to put in the work, mining remains a viable option for earning extra cash. However, you can make more money by buying and holding Bitcoins than you can by mining them.
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Frequently Asked Questions
Do Bitcoin miners make money?
Well, not in the way you’d hope. Mining isn’t easy, and it’s not cheap to do so. Mining has gotten harder over time, with manufacturers selling specifically designed equipment for mining today. Whereas mining a few years ago was possible to do on a regular computer, today it requires expensive specialty hardware dedicated entirely to the task of mining.
Why is Bitcoin going up?
Bitcoin price changes rapidly as demand for Bitcoins changes, due primarily to supply and demand. If too many people want to buy Bitcoins, the price will go up. On the other hand, if there aren’t enough buyers or sellers, the price will decrease.
How long does it take to mine 1 Bitcoin?
It depends on the hardware you’re using. The faster your hardware can process Bitcoin transactions, the more likely you are to solve a block and earn the associated rewards. As of October 2017, miners could expect to earn around 12.5 Bitcoins every 10 minutes. That number is halved every 210,000 blocks (approximately four years), so it will be 6.25 Bitcoins in 2022.
Can I mine Bitcoin with my computer?
You can try, but it’s not likely to be profitable. To mine Bitcoin profitably today, you’d need specialty Bitcoin mining machines designed for the task, which can run you thousands of dollars. Even then, your Bitcoin mining profits would be slim due to all the other costs mentioned earlier (electricity, cooling, space).