Cryptocurrency Mining – Is it Worth the Effort Today?
By Mary-Ann-Callahan - 2019-08-13
After a bit of a rough patch in late 2018 and early 2019, where many cryptocurrencies were struggling, the latter half of 2019 has proven to be quite fruitful in the industry. Most cryptocurrencies have rebounded and grown and thus, there is a renewed interest in the space.
More people are looking to get involved with crypto, or are looking to return to the space after being turned off by the huge losses of the last year or so. If you want to get involved in the market and become the best crypto investor you can, you owe it to yourself to familiarize yourself with every piece of information about cryptocurrency. This includes what they are used for, the teams behind them, their whitepapers and more.
There is a laundry list of different terms you should familiarize yourself with before you enter the bitcoin market
. One of the most common terms you will hear is “mining” (and no, not with hardhats and pickaxes). It is essential to understand how cryptocurrency is made, but there is much more to learn and know. In an effort to help you out, this article is going to talk not only about what cryptocurrency mining is but whether crypto mining is still worth it today.
What is Cryptocurrency Mining?
As mentioned in the introduction, cryptocurrency mining is how cryptocurrency is created. Whereas a lot of fiat currency is simply printed, the way of creating Bitcoin and other cryptocurrency is a little bit more complex and intricate. This type of currency is not only digital but doesn’t have one central authority in charge. In general, crypto mining is made up of 2 different parts that need to be present for the currency to be mined successfully. One is verifying transactions and the other is completing a complex mathematical problem.
First of all, a miner must verify a certain amount (1 MB) of transactions and have them added to the digital ledger. The actual amount of transactions this represents can vary wildly. It could be one, two or even multiple thousands. While that might seem like a lot, this part of the process is actually much easier than the other.
Secondly, miners will be responsible for solving an incredibly complex math problem. These are much too complex for anyone to ever figure out by hand, so high-powered computers are required. This is called “proof of work” and it is where the true competition of crypto mining begins. The first person to crack the code and find the solution will be able to fully authorize and approve the transaction. These miners will then be rewarded with some of the cryptocurrency they were mining. Only the first person to successfully solve the complex equation will get the rewards. Also, the reward is going down over time, a process that is known as halving.
Of course, as you could imagine, there is a lot of competition in this space as the cryptocurrency market has really taken a step forward in recent years. In order for someone to start cryptocurrency mining, they will need an incredibly strong and powerful computer, as well as solid internet. However, even that might not be enough to be competitive. The more miners that enter the market, the more complex the problems become and the more computational power it will take to potentially be able to solve them.
Now that you know about what cryptocurrency mining is and how it works, is it something you should consider doing?
Is Cryptocurrency Mining Worth the Effort Today?
While cryptocurrency mining was once a solid way to make a large profit, those days are largely done. It is simply far too competitive for the average person to successfully mine cryptocurrency and make any real money at it. First of all, there is just too much competition for this to be viable anymore. The chances of you being the miner to successfully find the solution are very low. There are several groups or companies with fleets of incredibly high powered computers with the best internet money can buy. Us average individuals just cannot compete.
Secondly, the costs of building a computer capable of mining successfully have gotten way out of hand in recent years. When Bitcoin was first created back in 2009, nearly anyone with a computer was able to mine cryptocurrency. But as it became more popular and more people jumped on the gravy train, it started to take more and more computing power to mine and be successful.
Nowadays, these mining computers cost thousands of dollars. Mining cryptocurrency, you should account for upgrades like graphics cards, therefore many people spend $10,000 or more on their mining computer. This, along with the huge electricity and internet bills that go along with mining, and walking away with a profit will be nearly impossible for the average person. The easy money that was once available to miners has been earned and likely spent over a year ago. Now, it is much more difficult for crypto mining to be worth it.