Mining cryptocurrencies has proved to be a fairly successful business venture for years, even with the large number of people involved in some form of mining activity at the moment. Many of them made a fortune, but we are warned by experts and experienced miners that those times are behind us, especially when it comes to well-known coins like Bitcoin, Bitcoin Cash, Ethereum, etc.
In this guide, we will discuss the main aspects that you need to bear in mind when deciding whether your next business venture should be mining crypto coins. We will also take the necessary steps and explore a few cool mining-related facts.
What is Cryptocurrency Mining?
Most cryptocurrencies are not issued or controlled by a central authority, unlike traditional, fiat currencies. In addition, crypto transactions are not checked and approved / rejected by middleman. By contrast, transactions are carried out directly on a blockchain-powered network between two parties, the sender and the receiver. For example, if you want to send your friend 1 Bitcoin, all you need is her Bitcoin address, a Bitcoin wallet where your bitcoins are stored, and an internet connection. It will be registered on the Bitcoin network as soon as you initiate the transfer. Before your friend can receive 1 Bitcoin, you need to verify your transaction with nodes on the network running it.
Your friend will be able to use Bitcoin after three verifications you sent her. Isn’t it more than worth this amount? The answer to this question is complex because many factors play a role in determining mining profitability.
If you’re planning to mine as a hobby without investing in expensive hardware equipment or renting high-powered cloud mining services, it might be fun, but with little to no profitability. You will need to consider the type of mining protocol that your desired currency uses and the type of mining machine to use to better put things into perspective. With a specific type of mining machine, not every currency can be mined.
How profitable nowadays is cryptocurrency mining?
Here we will be honest— significant profit appears only when a substantial amount of money is invested in the business. Research has shown that an investment in hardware equipment of approximately $5,000 is needed to break evenly and earn a daily profit.
This alone, however, is not guaranteed to help you earn a lot, as other factors apart from the competition, such as electricity costs, hardware efficiency and quality, and taxes play an important role in determining the potential ROI . Therefore, creating reasonable expectations about what you want to do with your mining gig is important. Everyone heard stories of Bitcoin miners becoming millionaires, but at the right time those people made the right investments.
If you decide to go through the mining of hardware and mine a crypto coin with a blocked mining network, you will need to buy an ASIC miner, or at least a solid GPU device.
At this time, the market is filled with offers from various companies, so be sure to carefully study each option before purchasing any machines. For instance, ASICs are pretty expensive, so you want to be sure that you made the right choice.
This practice is thought to be doubtful, to say the least, and in some countries could even land you in hot water. Our advice is to stay away from such places, especially if you’re not a trader or miner with experience.
Cryptocurrency mining Conclusion Based on all that has been outlined so far, it is safe to say that cryptocurrencies mining could still be a great way to earn some profit if the initial high costs can be overcome.
Getting involved in this industry represents a great service to the market of whichever coin you’re mining, granted that mining is essential for verifying and bundling up transactions in blocks, but also for minting new coins.Lastly, a higher number of miners results in larger decentralization, which is an essential feature of modern cryptocurrencies. That said, you will not only potentially earn a passive income, but you will also contribute to the overall ecosystem of cryptocurrency.