As Bitcoin got popular over the ages, so did Bitcoin mining and trading. Moreover, the price of Bitcoin continues to grow in 2020, reaching a new record-high price of $23,000 in December. Needless to say, today, there is an ever-rising number of businesses and people that want to get BTC. One of the ways of getting BTC is through mining. But the question is it still profitable in 2020?
What is Bitcoin Mining?
Bitcoin mining is a process where miners need to solve complex computational problems in order to approve blocks of transactions in the blockchain network, and with that, to discover new BTC. They earn a block reward for their work that is far from easy.
However, when Bitcoin was first launched in 2009, mining wasn’t at all competitive for the first Bitcoin miners, and they could easily mine on the computing power of their personal computer. But, since then, it has changed significantly.
First, it should be noted that the level of difficulty of mining adjusts every two weeks, based on the collective computing power on the network. Hence, as more people and organizations join the network, the more difficult it is to mine, and consequently, you will need powerful devices in order to mine and get the reward. Besides, only the first miner that solves the computational problem before the others gets the block reward.
Another event that impacts the profitability of mining is Bitcoin halving. The event is scheduled to happen after 210,000 blocks are mined, and it usually happened every four years. Bitcoin halving, as an event, directly influences the reward miners to receive because it cuts the reward in half. This method cuts the rate of inflation in half, devised by the creator of the blockchain network and Bitcoin – Satoshi Nakamoto.
So, at first, the block reward was 50 BTC, then after the halving in 2012, it got smaller, and it was 25 BTC. Next, it was further halved in 2016 to 12.5 BTC, and lastly, in 2020, it is 6.25 BTC. Halvings historically have been linked to bull runs of Bitcoin, and also, the last bull cycle was impacted by the halving in May. But, this also means it is becoming less rewarding for miners to keep mining in the long run.
Of course, there are many alternative options where you can get BTC, and one of them is buying BTC on exchange platforms. Online trading sites are deemed more accessible and profitable option for many individuals. One example is the Bitcoin Digital app is based on advanced AI technology, which means it is able to identify profitable trading opportunities.
In fact, you can earn as much as $1500 on a daily basis. And as it is an automated trading system, it is also highly recommended for new investors that aren’t that familiar with the crypto world. Actually, you will need to spend approximately 20 minutes per day on the platform. You can become a member by depositing $250.
Mining Farms and Mining Pools
One of the reasons why mining is competitive is the rise of mining farms and pools that mine on a large-scale utilizing professional mining equipment. Otherwise, you will need to make an investment in a high-quality ASIC or GPU. So, you need first-class computer equipment, and even though mining is possible on mobile devices, it is hardly profitable, and it will also damage your smartphone because it requires a lot of computing power. You also need to be aware of other costs like the electricity bill and the time you need to spend mining.
When it comes to mining pools, they combine resources and use high-end equipment. But, they also share the reward equally based on the contributing power of each member. They can also decide to charge a fee for being part of the mining pool. Mining farms, on the other hand, have even more collective power, and the mining takes place in a large space with many computers and air conditioning—furthermore, many mining farms function as start-ups with their own investors.
That being said, mining farms and pools are more profitable options for mining, especially now as the network is quite saturated, and it is very likely that the competition will increase in the future. But, still do your own research based on the costs and the reward you will earn overtime.
The Bottom Line
All in all, thanks to Bitcoin, the world is going through a second gold rush. Hence, now it’s the right time to get acquainted with the crypto world. If you want to become a miner, always make sure you have a good understanding of the risk and costs involved and the potential profit you can earn.