There’s no easy answer to this, but our guide will explain all the various factors that we need to consider. Before we answer the question is Bitcoin mining worth it, let’s quickly look at some of the processes involved.
The basics of Bitcoin mining
Bitcoin mining, in a nutshell, is verifying transactions on a blockchain ledger. As blockchains are decentralised, anyone with access to the internet can contribute to the mining effort.
Cryptocurrency mining and proof of work
Proof of Work (PoW) is a demonstration of the difficulty of mining. The difficulty is how hard the computer processor has to work. Since the processor has to work in a computational sense, the costs associated with Bitcoin mining will be for hardware (processor, PC, graphics card, or miner) and electricity costs.
Cryptocurrency mining is resource intensive and difficult, and this is deliberate. The amount of processing required to do this is enormous.
How hard is it to mine one Bitcoin?
Whilst you can’t mine one Bitcoin (the mining effort is used to solve a block that comes with a reward of 12.5 Bitcoins), we have treated it as though you can to help the illustration.
This guide gives a detailed analysis, but basically you would need 1,222 Bitcoin miners to mine one Bitcoin.
That sounds like a lot, and it is. This article looked at the environmental impact of Bitcoin mining, and it looks at a mine in China. In 2017, several media organisations were granted access to one of the world’s largest Bitcoin mines, located in Inner Mongolia (China), operated by Bitmain Technologies.
It’s an interesting article, and one analyst estimated that there were 25,000 mining machines at the factory with 21,000 dedicated just to Bitcoin.
This puts into context the difficulty for the individual or enthusiast who is interested in setting up or participating in Bitcoin mining. Also, as energy costs (of running the processor) can be high, readers may be interested to know the factory in China mentioned in the example above is situated next to a power station.
How to start cryptocurrency mining
These are the things you will need to start mining:
Mining hardware – a processor
You can buy the hardware needed on Amazon or eBay. There are lots of other pieces of supporting hardware available – cooling fans, stacking racks for miners and processing boards, cards, and chips.
The basic way to maximise returns is to have the hardware running for as long as possible every day and as efficiently as possible.
Find a mining pool
We can see from the example of the mining factory in China that for the individual, it is going to be very difficult (if not impossible) to individually mine a Bitcoin. The alternative is to join a mining pool where participants in the pool share the processing burden and rewards of any Bitcoins mined.
There is a wide range of mining pools to join. For beginners, most crypto commentators would recommend Slush Pool, which has been around since 2010 and was the first mining pool.
Get a mining program
Your miner will already have the appropriate software loaded, but you will need a program for your computer to measure, control, and monitor your miner. Many mining pools have their own software, but if you need to find your own, then it’s easily found with a Google search.
Conclusion: Is Bitcoin mining worth it?
Is Bitcoin mining worth it? Unless you invest heavily in equipment, the answer is probably not, if measuring it in a purely financial sense.
However, there are lots of reasons why individuals may want to take part other than purely financial. Many people believe Bitcoin and other cryptocurrencies and blockchain represent something new and revolutionary that will transform many aspects of our life.
This article explores reasons why individuals may invest in Bitcoin other than purely financial. In fact, given the volatility of Bitcoin prices over the last few years, you may wonder why anyone invests at all. However, this article argues that Bitcoin in some way represents change and the promise of something new.
Many people get involved in mining because they enjoy it as a hobby or they want to support a particular coin or project. So, the reasons why people may want to mine Bitcoin are not always clear cut. But it’s probably not worth it if participating in mining is purely for the financial reward.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.