In 2008 at the time of the financial crisis, bitcoin currency was introduced, and in 2009 the first bitcoin block was produced. Bitcoin is the most popular digital currency created by a mysterious entity named Satoshi Nakamoto, and he became the first digital currency miner in history. At that time, there were no cryptocurrencies that could exist, and therefore, there was no competition when bitcoin was created. Even after in early years of bitcoin, there was quite low competition, and through the process of mining, the miners were able to collect newly minted coins.
Only a few early adopters of bitcoin and those who patiently wait for the rise in bitcoin price have made huge money by investing in it. As of now, thousands of cryptocurrencies exist in the cryptocurrency world, and the competition has become quite high, but only many investors are attracted to the Bitcoin mining process. But do you know what the mining process is, and is it profitable or not? You can make a profit in bitcoin trading by investing through bitcoin evolution.
Bitcoin mining is done by miners who are the individuals who do the work of verifying the bitcoin transactions and adding them into blocks and adding blocks into a chain of blocks known as the blockchain. Miners are the ones who make the bitcoin network secure and make it run. To mine a block or verify the transactions, the miners must solve complex mathematical algorithms with hardware that have enough computing power to solve the algorithms.
Miners compete to mine a block, and the first miner who solves the algorithms gets the reward of newly minted bitcoins and commission of the hard work of solving the transactions and adding them into the blockchain. Mining is the only process or way to mine new bitcoins, and the miners are rewarded with bitcoins known as a block reward. New miners or investors may not know, but it is a fact that the maximum-minimum capacity is in the hands of large tech-savvy companies that use warehouses or mining farms to get the electricity at a low cost. This is the best way to make bitcoin mining profitable by reducing the electricity and other expenses.
Is Bitcoin mining lucrative?
There is no specific answer to this question because it depends on several factors. Earlier, when bitcoin currency was developed, mining was an easy process, and the difficulty level was low. The difficulty of mining has increased, which means that hashing power has also grown, which means that miners are verifying their transactions, but investments in mining are also going on. But it would be best if you decided whether the process of mining will be lucrative for you or not. The factors on which it is dependent include:
Price of mining hardware you invest in
Mining hardware is of great importance in the mining process, and therefore, a miner must always invest in the best mining hardware. The higher or best is the price of your mining hardware, and the longer is the return on your investment.
Price of electricity
One of the major expenses of the bitcoin mining process is the price of electricity. If you are planning to become a miner, you must check your area’s electricity price and then decide whether it will be profitable or not.
Mining difficulty level
Miners must pay attention to the mining difficulty level. The difficulty level keeps on changing as per the transactions and number of miners. It is always better to assume that the mining difficulty level will increase in the future. It would be best if you got your mining hardware according to the difficulty level of mining.
The efficiency of mining hardware
All the different mining hardware types have different efficiency and different hashing power to consumption ratio of electricity. The profitability of bitcoin mining depends on the efficiency of mining hardware.
Price of bitcoin
Cryptocurrency mining is highly volatile, and the popularity and price of bitcoin are growing significantly. Before you get into the mining process, you need to know if bitcoin mining is suitable and profitable for you. It would help if you kept yourself updated about the factors that affect the price of bitcoin.