Skip to main content

Mining of Cryptocurrencies for Profit

Cryptocurrency can certainly be called a phenomenon of this century. With more and more cryptocurrencies in place together with new applications of the blockchain technology, the impact it has on the world cannot but be underestimated. For those wishing to make a profit on this advancements, there are several ways possible.

One may either buy the digital currency at today’s inflated prices or start bitcoin mining. The later variant, though, does come with expenses and risks of its own. And the more popular bitcoins become, the harder it is to mine them profitably. Even though some predict cryptocurrencies’ popularity to wind down, cryptocurrencies do still attract investors with their:

  • Security: every cryptocurrency user has a specific, anonymized digital ID. When a transaction is executed, these identifiers are recorded throughout the distributed system, making fraud harder to carry out.
  • Pseudonymity. transactions in digital currencies are pseudonymous, meaning that each one is attached to a specialized ID and does not disclose the trader’s actual name.
  • Accessibility: one of the main features of cryptocurrencies is that they make stable transactions in countries where the national currency is unstable possible.

Mining: What is Needed to Start

Bitcoin mining is executed by computer programs computing an encryption function, also known as a hash, on a set of random numbers. If the computation results in a number below a certain threshold, a new Bitcoin is created and is assigned to whichever miner succeeded at the computation.

Generally, no more than 21 million Bitcoins will ever be created. As of 2017, about 17 million of those coins have already been mined with each consecutive Bitcoin being harder to unlock. Assuming the bitcoin mining industry does not change dramatically, it looks like the 21 million-bitcoin limit will not be reached until the year 2140. So miners do have a real opportunity to earn some money on Bitcoin mining.

Technically, all one needs to start mining is a computer with Internet access. However, it is not that easy as it may sound. The main difficulty is that the computer power required for mining of a single Bitcoin is phenomenal. For this reason, most miners join in the pool with work and rewards shared among all pool participants. The person running the pool takes a small percentage as a fee but you as a miner get instant gratification.

One should also take into account the overheads for cryptocurrency mining:

  • Extreme electricity consumption
  • Constant Internet access
  • Location
  • Maintaining the mining hardware
  • Paying taxes depending on the jurisdiction

So can one make money mining Bitcoins with a personal computer?  Strangely enough, the processing needed for Bitcoin mining is much better done by a graphics card, rather than a CPU. So unless one has a gaming computer with a good dedicated graphics card, one can mine Bitcoin, but so little that it will hardly make any difference. Creation of the pool of miners, as mentioned above, can be the solution to this problem.

All in all, it is rather possible to earn money on cryptocurrency mining being aware of the several facts. Bitcoins can only be mined within a 21 million limit, so one has to put one’s best foot forward. It is also advisable to create a pool of miners with sufficient computing power and share all the profits gained in the course of mining among the members of such a pool.

Leave a Reply

Your email address will not be published. Required fields are marked *