Bitcoin mining is it worth it 2016
Imagine being told that your wage was going to be cut in half. The current expected date for this change is 11 July Many see this as the day when Bitcoin prices will rocket and when Bitcoin owners could make a great deal of money. Others see it as the start of a Bitcoin crash. At present no one quite knows which way it will go. Bitcoin was created in by someone known as Satoshi Nakamoto , borrowing from a whole lot of research methods.
It is a cryptocurrency , meaning it uses digital encryption techniques to create bitcoins and secure financial transactions. Conventional currencies usually have a central bank that creates money and controls its supply. The algorithm behind Bitcoin is designed to limit the number of bitcoins that can ever be created.
All Bitcoin transactions are recorded on a public database known as a blockchain. Every time someone mines for Bitcoin, it is recorded with a new block that is transmitted to every Bitcoin app across the network, like a bank updating its online records.
Mining increases the money supply. Unlike with traditional currencies, which can have their money supply reduced by central banks to prevent too much inflation, a bitcoin will stay in circulation forever unless it is accidentally deleted which should be rare. An over supply of any currency can weaken its value so economists try to carefully balance the supply of cash with the demand.
Without a central bank to do this, Bitcoin has an absolute limit built into the system. There are currently around In order to put off the day when there is no Bitcoin left to be mined, mining becomes more difficult as time goes on. The system is also designed to halve the value of what you earn from mining on a specific date.
This is expected to be on 11 July , based on the number of new transactions for bitcoins and the estimated rewards for creating the new ledger entries. Apart from that there are plenty of other things which needs to be considered is they could go wrong, for example:.
So is Bitcoin Mining Profitable? Yes, It is but only if you invest huge amount of capital in a good mining rig otherwise not. Only those who possess or can afford high powered machinery can mine bitcoins with profitability. While mining is still technically possible for anyone, those with under powered setups will have more money spent on electricity than making money on bitcoins. In simple words you will have losses. I will explain everything in depth so its best we start from knowing a few basic technical terms from the world of Bitcoin mining: In simple words Hash is the mathematical problem that needs to be solved which is done by computational power.
Hashrate solutions is the rate at which these problems are being solved. Each time a block is solved, a constant amount of Bitcoins are created and rewarded to miners.
This number was initially set to 50, halved to 25 in late, and halved again to The next halving event expected is around mid Since Bitcoin gained a lot of attention and so many people came into mining,Bitcoin Network's Hash Rate increased exponentially, Bitcoin block time was reduced from 10 minutes.
So difficulty of solving the mathematical problem has to increase in order to adjust the block time and network's Hash Rate increase that is the reason why there are fluctuations in difficulty.
Basically the more miners that join, the harder it gets to actually mine bitcoins. Using bitcoin which can be ASIC or any electronic device requires electricity. Electricity is the major on-going cost of Bitcoin mining. Electricity rate can be found on your monthly electricity bill.
Each miner Consumes a different amount of energy. You will need to know your miner's exact power consumption before calculating profitability.. The price paid per Watt will greatly influence profitability. You can find this on interenet through some research. A mining pool is a group of miners that mine bitcoin faster and more efficiently. Mining in solo is not as profitable as mining in pool that is because mining in pool bitcoins are mined faster and you will receive your bitcoins per share depending on how much computation power you provide although there are different pools out there for different shares.
Joining a mining pool has fees which is usually around 1.