With the ongoing cryptocurrency boom, there has been an explosion of newcomers into the crypto ecosystem. And, unsurprisingly, one of the hottest topics in the ongoing boom is bitcoin mining. That’s because 1) bitcoin is the OG cryptocurrency, and 2) because cryptocurrency mining is unlike any phenomenon that humanity’s ever seen before.

Accordingly, the novelty and profitability of bitcoin mining have many of these newbies wondering: is mining right for me? It’s an important question to ask before you sink thousands of dollars into a mining project, as there are numerous factors that might make you tilt “yay” or “nay” when it comes to your own personal tastes.

Bitcoin Mining

Today, then, we’ll be looking at the past, present, and future of bitcoin mining to help you get a better idea for whether or not mining bitcoin would be right for you personally here and now.

The Early Days Of Mining

In the first days of Bitcoin, Satoshi Nakamoto was the only miner on the network. Reportedly using several computers simultaneously, Nakamoto mined approximately 1,000,000 bitcoins in the first weeks of the project, courtesy of only CPUs.

And this dynamic remained for the Bitcoin network’s beginning months, as more and more miners arrived to use their CPUs to verify the network.

As Hal Finney noted in his “goodbye” letter to the Bitcoin community:

“Those were the days when difficulty was 1, and you could find blocks with a CPU, not even a GPU. I mined several blocks over the next days. But I turned it off because it made my computer run hot, and the fan noise bothered me. In retrospect, I wish I had kept it up longer.”

You and us both, Mr. Finney.

From CPUs To GPUs

One CPU was supposed to provide a “single vote” on the bitcoin network in the project’s beginning days, but things soon changed as GPUs, or graphics processing units, came to the fore. GPUs can produce the same mining power as dozens of CPUs, so they quickly garnered bitcoin miners’ interest.

Laszlo Hanecz, the person responsible for buying two pizzas for 10,000 bitcoins in 2010, is allegedly the first GPU miner of bitcoins. From Nathaniel Popper’s popular book Digital Gold:

It is not widely known, but in April 2010, Laszlo was essentially the first person to experiment with using the GPU card in his computer to more efficiently mine Bitcoins. Before that, most Bitcoin users had been employing their much less efficient CPU to do the computations. Laszlo’s CPU had been winning, at most, one block of 50 Bitcoins each day, of the approximately 140 blocks that were released daily. Once Laszlo got his GPU card hooked in he began winning one or two blocks an hour, and occasionally more.”

ASICs Arrive

After GPUs came specialized mining hardware devices called ASICs, which remain as the standard-bearer bitcoin mining hardware today. The very first ASICs were as powerful as dozens of GPUs, while modern ASICs are more than 200 times powerful than the inaugural generation of ASICs!

Naturally, then, ASICs are the gold standard of bitcoin mining in contemporary times. If you aren’t mining with ASICs, and lots of them, then you’re probably not making any legitimate return on investment (ROI) here and now.

Bitmain Asics
Bitmain ASICs at work.

March Of Increasing Difficulty

Beyond the evolution of mining hardware in bitcoin, it’s crucial to understand the bitcoin mining becomes more and more difficult as time goes on. Satoshi Nakamoto designed the original cryptocurrency to adjust its difficulty every 2016 blocks.

This means bitcoin is gradually harder and harder to mine, with block rewards halved every several years. Nothing is to change this dynamic going forward, as the difficulty is only going to increase.

Now? Mining Is Hard, Expensive

If you hadn’t already guessed where we were going, the current state of bitcoin mining is difficult and off-putting for casual, everyday investors. Not only is the ASIC hardware that’s needed growing more expensive by the day, but so too is bitcoin’s difficulty adjustments only going to become stricter in the future.

That means it’s costing more money to retrieve less bitcoins. And that’s a dynamic that should have anyone seriously considering becoming a bitcoin miner thinking twice. Then again, though, there’s still hope.

The Hedge? The Bitcoin Price Potential

Concerns about the expenses and effort that bitcoin mining takes can be mitigate in the years ahead if the bitcoin price continues to climb to unprecedented price highs.

The BTC price went wild in 2017, and if it continues on such a wild trajectory, we’re possibly looking at BTC prices that could range anywhere between $20,000 USD and $100,000 USD by the end of 2018.

With that said, bitcoin mining would be profitable if such price rises occur because even mining chump change amounts of BTC today could provide nice sums in the future provide the bitcoin price keeps surging.

And that’s a bet many miners are happily taking now. So a great question to ask yourself before making the dive into becoming a miner is how strongly do you think bitcoin is going to perform in the years ahead?

The answer to that question should inform your verdict.

Cloud Mining Probably Not Optimal

One option that’s bandied about in the crypto space is cloud mining: you buy a mining contract, and miners around the world do all the work for you.

The problem? The cloud mining arena has been rife with scams in recent years, and beyond that, the prices of contracts make it so that ROIs are minimal for investors. To that end, cloud mining is an interesting option for those who are interested in indirectly becoming a miner, but it’s not going to be as profitable as investing in your own personal rig in most cases.

NiceHash

Get In Before 2140 …

The final bitcoin is projected to be mined in the year 2140.

What does that mean? You have more than a century to decide whether you want to spend the money necessary to getting a miner operation up and running.

But you won’t want to wait too long if the bitcoin price explodes, right? So timing your entry point if you’re interested is key too.

What About Bitcoin Cash

Bitcoin Cash (BCH) is kind of, sort of Bitcoin (BTC), so what about mining that?

It’s true, you can use the same ASIC gear to mine BCH. The trade-off? The Bitcoin Cash price is several thousands of dollars less than the Bitcoin price at press time, making it so that it’s considerably less profitable to mine BCH for now.

Will this dynamic stay the same forever? There’s no telling. But it’s clear that for now Bitcoin is exponentially more lucrative to mine. And that means mining Bitcoin Cash is best for enthusiasts right now or for those who are dead-set on diversifying their mining activities.

Conclusion

As it stands, our conclusion is that bitcoin mining is best for people who 1) have a lot of money to spend on getting an operation up and running, or 2) passionate cryptocurrency enthusiasts who just want the satisfaction of running their own rig.

Outside of these two demographics, you probably won’t make any real profits on bitcoin mining for now. If you’re wanting to mine on a more limited budget, finding altcoins that support CPU or GPU mining is your best bet, take a look at some of our guides:

Posted by William M. Peaster

William M. Peaster is a cryptocurrency journalist and copy-editor based out of El Paso, Texas. He's an avid fan of Ethereum, ERC-20 tokens, and smart contracts in general.

All content on Blockonomi.com is provided solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate.

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