Bitcoin mining is very popular among crypto traders and there are various ways you can mine Bitcoin. You can have your own mining rig (quite expensive) or you can join a mining pool which is a much cheaper option. The mining rewards of Bitcoin are halved every four years or so. Bitcoin was first mined in 2009 and then the reward was 50 BTC/hour. Now you will get 6.25 BTC/hour. So, if you complete a block then you will earn ($44,047*6.25) = $275293.75.
- Bitcoin is the first digital currency and Satoshi Nakamoto is the developer of Bitcoin
- Bitcoin uses a peer-to-peer computer network to complete the transaction between two users
- Bitcoin mining is used for adding transaction records to Bitcoin’s public ledger of the blockchain
- Bitcoin mining is also used for validating cryptocurrency transactions
- Every 4 years, the rewards for Bitcoin mining is reduced by half and currently you will get 6.25 BTC for successfully adding a block
What Is Bitcoin?
Bitcoin is the first digital currency that was released in 2009. Satoshi Nakamoto is the developer of Bitcoin. He has managed to create a decentralized system that doesn’t require a single administrator like the banks and governments. Instead, Bitcoin uses a peer-to-peer computer network to complete the transaction between two users. Traditional currency is regulated by the government that issues it. But, Bitcoin is controlled by a network of individuals and powered by peer-to-peer technology. So Bitcoin is a currency made of codes with an application programming interface (API), price index, and exchange rate.
What Is Bitcoin Mining?
Bitcoin mining is the process of introducing new Bitcoin to circulation by solving a computational puzzle. This process is also used for adding transaction records to Bitcoin’s public ledger of the blockchain. This process is also used for verifying bitcoin transactions. So, bitcoin mining is not only a process of creating new coins but is also used for validating cryptocurrency transactions. You will require sophisticated hardware to solve the extremely complex computational math problem.
How Bitcoin Mining Works?
The main purpose of Bitcoin mining is to solve the computational math problem and the first computer to find the solution to the problem is awarded the block of Bitcoin. You will need high configuration expensive computers and enormous amounts of electricity to solve the puzzle and win the bitcoin block. You will require hardware that is known as application-specific integrated circuits or ASICs and it might cost you around $10,000. If you are able to successfully add a block to the blockchain then you will earn 6.25 Bitcoins as a reward.
How Much You Can Earn Mining Bitcoin?
By now, you might have known that the rewards for Bitcoin mining are reduced by half roughly every four years. Bitcoin was first mined in 2009 and then mining one block would earn you 50 BTC. In 2012, the reward was halved to 25 BTC. By 2016, the reward was again halved to 12.5 BTC. Finally, on May 11, 2020, the bitcoin mining reward was again halved to 6.25 BTC. Currently, the price of Bitcoin is around $45,000 per bitcoin, which means you’d have earned $281,250 (6.25 x $45,000) for completing a block. But the price of Bitcoin is volatile so it is very difficult to calculate the exact amount of money you can earn by mining Bitcoin.
Hardware For Bitcoin Mining
Mining hardware is different from the traditional computer hardware. A bitcoin mining hardware is a specialized computer and its main purpose is to mine bitcoin. The more powerful and energy-efficient the hardware is the more profit you will generate from the mining. The bitcoin mining hardware is known as an Application-Specific Integrated Circuit device, which is commonly referred to as an ASIC. You can also mine bitcoin using common CPUs, GPUs, or more advanced FPGAs, but it will take lots of time and it will also cost you more money. Some of the best bitcoin mining ASIC machines are –
|Antminer S19 Pro
What Is Hashrate In Bitcoin Mining?
In Bitcoin mining, Hashrate is a term that refers to the total combined computational power per second that is being used when mining. Simply, it is the speed of bitcoin mining. It is measured in units of hash/second. Bitcoin mining rig with high hash power means they are more efficient to process lots of data in one second. Here are the SI units for Hashrate –
|KH/s (thousands of Hashes/second)
|MH/s (millions of Hashes/second)
|GH/s (billions of Hashes/second)
|TH/s (trillions of Hashes/second)
|PH/s (quadrillions of Hashes/second)
Risks Of Bitcoin Mining
Bitcoin mining is profitable but there is also risk involved. There are various factors available that determine if bitcoin mining will be profitable for you or not. Let’s check them out!
Profitability: People mine bitcoin to make a profit. However, even you become successful to mine Bitcoin it is not granted that you might make a profit. Because bitcoin mining has high upfront costs of equipment and ongoing electricity costs which makes it very difficult to generate profit. According to a 2019 report from the Congressional Research Service, the electricity for one ASIC can use the same amount of electricity as half a million PlayStation 3 devices. So, what you can do is, join a bitcoin mining pool to minimize the high cost and add more capability to generate more profit.
Price Volatility: This is a very important factor because the price of Bitcoin is volatile and it was traded for less than $10,000 and nearly $65,000. So, it is very difficult for the miners to know if their reward will outweigh the high costs of mining.
Regulation: Bitcoin might be popular among the crypto traders around the world but very few governments have embraced bitcoin because bitcoin operates outside government control. Therefore many governments are outlawing the mining of Bitcoin or cryptocurrencies that increases financial risks and speculative trading.
FAQs About How Much Money Can You Make Mining Bitcoin
Is Bitcoin Mining Legal?
Whether Bitcoin mining is legal or not completely depends on your geographic location. In many countries bitcoin mining is illegal; on the other hand, there are countries where bitcoin mining is legal. The concept of Bitcoin has an adverse effect on fiat currencies and government control over the financial markets. For this reason, Bitcoin is completely illegal in certain places.
Is CPU Mining Profitable?
If you are talking about Bitcoin then CPU mining is not profitable and it never was. Bitcoin mining has become more complicated and current CPUs don’t have enough power to mine Bitcoin. So, if you want to mine bitcoin then you must have an ASIC and a reasonable power source, or it will be very difficult for you to make a profit from Bitcoin.
Can You Mine Bitcoin Direct To An Exchange?
Yes, you can mine Bitcoin directly to exchange however, it is better to keep your bitcoin in a wallet where you have access to the private keys.
Is Bitcoin Mining Profitable In 2021?
Yes, Bitcoin mining is profitable in 2021. According to a recent survey, the current bull run in April 2021, cryptocurrency mining has generated $3 billion in revenue! It means on an average bitcoin miners have earned $100,000,000 in profit every day.
How Much Does It Cost To Mine Bitcoin 2021?
The answer to this question depends on what type of mining rig you would be using and what are the costs of power consumption in your area. On average, bitcoin mining might cost you around $7,000-$11,000 in 2021. On the other hand, the lifetime cost of an ASIC miner to mine one bitcoin is on average $15,000-$19,000.
How Long Does It Cost To Mine 1 Bitcoin?
Usually, it takes 10 minutes to mine 1 block and each block contains 6.25 BTC. So, theoretically, it will take just 10 minutes to mine 1 BTC as part of the 6.25 BTC reward.
Is It Possible To Mine Bitcoin For Free?
Yes, it is possible to mine bitcoin for free. There is various free bitcoin mining software available that you have to install on your device and start mining bitcoin for free. Some popular free bitcoin mining software is –
How To Earn Free Bitcoin?
There are some effective and proven methods available to earn bitcoin for free. They are –
1. Use a Crypto Browser
2. Bitcoin Faucets
3. Play Mobile or Online Games to Earn Bitcoins
4. Cryptocurrency trading
5. Shopping rewards
6. Do Jobs Online to Earn Bitcoins
7. Referral Program by Binance
8. By Participating In Airdrops
How Can You Improve The Hashrate Of Your Bitcoin Mining Rig?
There are few ways you can improve the hashrate of your mining device. They are –
1. GPU warmth
2. Mining software
Which App Can I Use To Mine Bitcoin From Android Phones?
You can use your android smartphone to mine bitcoin and some of the popular apps are –
8. RaveOS, etc.
Last Updated on October 20, 2022 by Magalie D.
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.