Bitcoin mining is still going strong despite the current predicament in the crypto industry with prices crashing across the board. Many investors who began mining many years ago are still increasing their hash rates and continue maintaining their massive facilities even if they have to overpay and even close market positions to simply cover growing expenses.
While it is true that many large facilities are losing money at the moment, some individual miners still earn good rewards and manage to make living without any issues.
The future of Bitcoin
Mining Bitcoin was extremely profitable during bull runs when “farmers” could earn rewards in BTC and continue accumulating them while BTC was appreciating. However, during market downturns, it is possible to lose money on mining.
There are several things that you must know about Bitcoin and bitcoin transactions. The price at the time of writing is about $20.6K. The market cap is close to $400 billion. The reward for adding a new block to the network is 6.25 BTC which will change in 2024 during the next halvening when the reward will be reduced to 3.25 BTC.
Note that hash rates are growing across the board while rewards are expected to diminish. At the same time, it is hard to predict how the market will change in the nearest future. While many are predicting a powerful Bull run during the beginning of 2023 or even at the end of 2022, the harsh reality is that the vast majority of analysts do not know what will happen and just make wild guesses.
On the other hand, huge players like BlackRock, JPMorgan, and Fidelity Investments are making moves in the crypto industry. These corporations are opening BTC funds, offering crypto trading to their retail clients, and focusing on investing in new interesting blockchain projects.
When should you mine?
It was important to identify which factors determine the profitability of a mining operation. There are three main aspects:
- The price of the hardware that you are planning to use.
- The price of electricity in your area.
- The price of the asset that you receive as a reward.
The optimal set of conditions will be if you have idle computers with good CPUs, cheap or free electricity, and the price of BTC is on the rise. At the end of 2022, these conditions are reached only in certain regions of the world.
Having a couple of powerful rigs lying around is not something that many can afford. The price of electricity is expected to skyrocket in the US, Canada, and Europe. The price of BTC has been moving sideways for a while now and there is no indication that the market is ready for a sudden Bull rush in the nearest future considering the shape of the global economy and the stock market.
However, if you have these conditions lined up and can afford to run a farm without overpaying for energy, it is a good idea to start a mining node.
How to start mining Bitcoin?
The process is quite complicated and requires technical know-how on the part of a miner. Thankfully, you can watch thousands of hours of videos that explain in detail how to set up a mining machine without much hassle.
The process involves several steps:
- Create a new Bitcoin wallet address to receive rewards.
- Set up your PC and wipe it to not run Windows OS which will use resources.
- Download an installation package for a miner and create a bootable USB stick.
- Insert the USB stick, install the mining software, and connect to the network.
Each step is explained in excruciating detail in tutorials that are attached to bitcoin mining software. Note that you should also calculate potential rewards by using a calculator. You can learn the max hash rate of your machine by using apps like Cudo Miner or NiceHash. These programs gauge the HR and allow you to estimate how much you can earn by mining.