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With the price of bitcoin rising and the equipment cost rising, the Bitcoin mining industry has been a hit in recent years. Even though the price of Bitcoin has been declining, miners can still profit due to the amount of energy they can produce per dollar spent on electricity and hardware. Mining is still profitable for four reasons:
1. The Value Of Bitcoin Continues To Increase
Bitcoin mining is advantageous to miners because mining bitcoins is currently very profitable. The rise in bitcoin’s value is that investors believe there will be a shortage of bitcoins in the future. It means that the price of bitcoins will continue to rise, allowing miners to earn more money from bitcoin mining.
Bitcoin’s value is rising continuously, which is also one of the reasons why miners continue to profit from the cryptocurrency. On December 7th, the price of a single coin had risen from under $1,000 per unit at the start of 2017 to a new high of over $17,000. The value increment has sparked a worldwide interest in Bitcoin and cryptocurrency in general, as investors try to connect with bitcoin mining companies while the price is still low.
2. Difficulty Levels For Mining Bitcoins Remains Stable
The mine’s difficulty level and the amount of power it consumes are the keys to profitability. Difficulty levels for mining bitcoins have remained stable, implying that even if you’re not more intelligent than the average person, you can still wield incredible creative powers.”
Mining bitcoins is still profitable for some people, even though it is becoming increasingly difficult to get started. It creates a virtual barrier to entry, ensuring that inexperienced miners do not participate, resulting in less power getting used and higher bitcoin profits. Of course, this also means that professional miners with massive computer processing power can gain an even greater profit.
3. More Efficient ASICs
ASIC stands for Application-Specific Integrated Circuit, and it is a device that has only one purpose: to mine bitcoins. The latest generation of these devices, known as 7 nm miners, can mine roughly ten times faster than previous models. It means that to break even with the cost of electricity (which many people overlook), you’ll need to be able to recoup your investment in no more than 2-3 months.
Otherwise, your mined coins will take too long to pay off, and you will likely lose money on power bills in the interim. This generation of ASICs has 7 nm semiconductor chips, which explains why they can mine so much faster than previous generations.
The latest CPUs and GPUs, in comparison, have a process size of 14-16 nm. Intel and AMD have been battling to make smaller transistors in their processors for several years. As a result, to compensate for the smaller size, they have simplified the architecture of CPUs, effectively removing functionality from each core and lowering its performance.
4. Block Rewards
Because of the block rewards, bitcoin mining is profitable. Block rewards, which come in two forms: transaction fees and newly minted bitcoins, are the only way miners make money. Users who send bitcoin transactions pay small fees called transaction fees. The miner who includes that transaction in a mined block receives these fees.
The current reward for a block is 12.5 bitcoins, hence the term “block reward.” The number of bitcoins generated per block began at 50 in 2009, halved to 25 in 2012, and will split every 210,000 blocks (roughly four years) until it reaches zero around 2140. With the decreasing block reward, the total number of bitcoins released will approach 21 million over time.
Because the block reward is the only way to get bitcoins, it’s crucial to understand how it works. It has a built-in level of complexity that ensures a steady supply of new coins while also allowing old coins to get recycled with little impact on their value.
Block rewards get generated at a predictable rate, and as the block reward approaches zero, the generation rate smooths out. The planned total release of bitcoin is divisible to a very slight degree. It can be considered divided into billionths of a bitcoin for practical purposes (a unit known as a “Satoshi”).
Bitcoin mining is a lucrative cryptocurrency investment. Due to the profitability of bitcoin mining, many people have been able to profit from it, and it isn’t going away anytime soon.