What is Bitcoin Mining?
Bitcoin Mining creates new blocks and adds them to the block chain. By adding such a block, new Bitcoins are distributed. It is a resource demanding process that ensures that a miner is rewarded for his efforts in the form of coins. You have several ways to mine Bitcoin yourself: solo, pool or cloud mining. This requires special hardware that is active either with you or your mining service provider.
What is behind Bitcoin Mining?
Bitcoins are produced by solving complex computing tasks. The data blocks must be decrypted to produce a Bitcoin. So-called “Bitcoin Miners” exist. These are high-performance computers designed for only one purpose: solving complex mathematical algorithms and producing Bitcoins. Bitcoin Miners are even offered for rent. The problem in this matter is the cost/benefit factor. Such high-performance computers require huge amounts of energy and generate a lot of heat.
Another problem of profitable mining is that mining for Bitcoins is becoming increasingly complex and the mining difficulty will grow steadily. The more computing power is made available to Bitcoin Mining, the faster the mining difficulty grows – and thus ever larger computing machines are needed to find Bitcoins.
Mining Bitcoin with own hardware
In order to contribute to the production of blocks as a miner by your own efforts, you need special hardware in the form of ASIC chips. These are available in different price categories from various manufacturers. The best known are Antminer9 and Avalon6. In the past, it was also possible to run Bitcoin Mining via the PC’s processor, but given the increased difficulty, this has long since become unprofitable. The expected electricity costs are significantly higher than the revenues. One of the most important components when choosing the right hardware is the processor:
- Hashrate: in TH/s
- Energy consumption
In the statement of electricity costs per hash, suppliers can be compared most easily: the higher the efficiency, the higher the price in most cases.
Further options for Bitcoin Mining
As an alternative to buying Bitcoin and mining with your own hardware you can also do cloud mining. Here you invest in hash power with a service provider who already has the necessary infrastructure. This is usually a fixed-term contract that you can conclude with companies like Genesis Mining. The advantages are mainly the avoidance of additional costs and inconvenience in your own four walls, such as a high electricity bill, downtime or unwanted heat. Caution is advised with hidden charges of any kind (electricity, operation, payout), so you should read the full contract carefully. Cloud mining is worthwhile for the provider especially because of the cheap electricity in developing countries.
In purely arithmetical terms: Is it worthwhile to mine Bitcoin with your own miner?
The best ASIC Bitcoin Miners (for example the Antminer S9) currently calculate 14 tera-hashes per second (14,000,000,0000 H/s). With the current difficulty, this mining machine would need 13,285,714 seconds, i.e. about 154 days (about 5 Monte), to find a valid checksum, and thus a block with a reward of 12.5 Bitcoins. This means that you could expect to find 12.5 Bitcoins, or about 10,000 Euros, approximately every 5 months. The Antminer S9 currently costs about 2,000 Euro. With what the hardware would be amortized very quickly. But the Difficulty grows up-to-date so rapidly further that this is only a snapshot. So the miner has to calculate more and more until he has found a block. Added to this are the high electricity costs that a miner needs.