Charles Shrem, a bitcoin advocate and pioneer, said he is “just waiting for” bitcoin to become “a billion dollar industry.” It might not be quite there yet, but the cryptocurrency is still young. If you’re fairly new to the cryptocurrency sector, you might benefit from understanding a definition of bitcoin mining and then delve further into committing a BSD-based unit to a bitcoin client. Bitcoin mining can be profitable, but a savvy bitcoin miner knows that the mining process can be costly too. Therefore, it’s worth looking at some of the metrics a new miner will need to consider to see whether a new operation is likely to be fruitful.
Out of your control: Bitcoin price and hash difficulty rate
The first group of measures to look at are the things which an individual miner has no control over: the current price of a bitcoin, that is, its exchange rate with the dollar, and the hash difficulty rate. At the time of writing, bitcoin is currently around the $8000 dollar mark. A high exchange rate is crucial to making sure cryptocurrency operations translate into gains in a currency you can actually use day-to-day. Meanwhile, hash difficulty rate gives a miner an insight into how quickly the calculations that are needed to be done to produce bitcoin can be made. A higher rate means your individual computer’s share of the total hashing power decreases, making mining a less profitable endeavour.
Start-up and running costs: Kilowatt per hour and individual hash rate and wattage of equipment
Another important set of metrics are running costs. It’s important to keep the cost of electricity as low as possible to reduce electricity costs. This means a miner needs to keep an eye on kilowatts per hour. It’s this low electricity rate which attracts bitcoin miners to otherwise a seemingly random place like Plattsburgh, NY. On top of this, it’s important to select a computer which has a high individual hashrate like the one of the series of Antminer computers, to maximize the proportion of total hashing power one computer can generate. Lastly, look for a low initial cost in buying a suitable bitcoin mining rig. Depending on the size of the operations, buying a larger amount wholesale could reduce your initial costs.
Profitable or not?
Bitcoin mining might have come under scrutiny recently for not being profitable enough. However, it’s important to look at the revenues and costs of your operation yourself before you make the decision to mine bitcoin: considering the price of bitcoin and hash difficulty rate on one hand, and the setup and running cost on the other.
by Lucy Carr