The cryptocurrency mining is an activity through which tokens of different cryptocurrenciesare obtained by carrying out a series of necessary processes for the validating transactions in a blockchain. In order to keep a record of the operations that are carried out in real time, all the nodes of the network proceed to the resolution of algorithms that, after accessing the determined block, puts into circulation the previously defined digital assets.
This work requires a considerable amount of effort and processing power, making access to new, more complex blocks and thus preventing the entry of attackers who try to falsify or modify them. The operations carried out by the miners (the individuals who own the mining equipment) help to maintain the security and stability of the network, for which they obtain a reward in cryptocurrencies.
The speed/processing capacity of a computer to mine digital assets is measured in the Hashrate, which is defined as the processing capacity of the Bitcoin network for each of the equipment that is added. The sum of the power of all the computers in the network gives us as a result the total hashrate in it.
How much Bitcoin can be mined?
It is common to think that, being a digital asset, the supply of Bitcoins is infinite, however, this perception is totally wrong. The amount of bitcoins that may come into existence is finite and is established in the Bitcoin software in 21 million bitcoins, not one more, not one less.
However, the number of bitcoins that are released is not always the same, it is established by the software that every certain number of blocks is reduced by half. This automated process is called halving and serves to establish a certain time until the end of the issuance of currencies in order to pursue a deflationary model, or what is the same, to raise its value gradually.
How does the Halving work?
Bitcoin Halving is a declaration in the bitcoin code that establishes the reduction in half of the rewards obtained in bitcoin for the mining work carried out after every 210,000 blocks. In the beginning when mining started, the reward for each block mined was 50 Bitcoins every 10 minutes and now after the last two cuts the reward is 12.5 BTC.
One of the purposes in the creation of Bitcoin, was to establish a self-sustainable system. Satoshi Nakamoto was inspired by the extraction of gold to implement the mining of the cryptocurrency and, with this in mind, he resolved to add more difficulty over time by reducing the rewards to control the supply.
People usually wonder if the Halving can change BTC’s price. Anyone would say no, since it is not a spontaneous event and is planned years in advance, however, the price is actually involved in a positive aspect. Halving helps the cryptocurrency to maintain sustained price increases over time, so that it does not lose its value over time. If there is not a new amount of Bitcoin offer in the market, it increases its scarcity and therefore its price will increase progressively to have a limited supply.
Finally, this event increases the cost of mining each bitcoin individually. While the difficulty of the network increases for the mining process and the reward rate decreases by half, the real cost of mining a bitcoin increases and with this, the price of each bitcoin operation also increases.
Is cryptocurrency mining profitable?
Since this activity began, we have heard (and even witnessed) large mining farms with hundreds of mining devices that are constantly operating, thus producing a large number of cryptocurrencies on a monthly basis, which with the rise in prices it would eventually restore the investment funds and start producing profits, although not all members of the community have the means to acquire that amount of devices. Bitcoin mining competition increases progressively and although it is very expensive, it is not necessarily our only option.
Bitcoin is the pioneer cryptocurrency in this space, however, there are many alternative currencies (altcoins) that have also reached good levels of quotation in the market and have a very efficient protocol. Each of these currencies have their own mining algorithms and costs. In many of them it is possible to participate with just a good graphics card (these work very well to solve mathematical calculations) or even with a traditional computer.
In this sense, one of the most important cryptocurrencies in mining is Ethereum, being mined by teams with very specific graphic cards and software. The “Rig” mining equipment is recognized for mining cryptocurrencies based on the Ethereum blockchain, as in the case of Ethereum Classic and Monero.
Countries such as China, Canada, Iceland, Georgia, Russia and Switzerland have very favorable conditions for the cryptocurrency mining due to their cold climates and optimal internet connections, as well as their moderate prices for electric service. There are countries, as in the case of Venezuela, that have very cheap possibilities for mining, since the electric service costs, together with the internet, do not exceed $3, however, the weather is not cold enough and these services are currently in terrible conditions, so it would not be convenient to maintain these activities in that region.
What are the mining pools?
The greater the processing power, the easier it becomes to solve a block and therefore, obtain a reward. It is for this reason that the mining pool was created, to carry out joint work and thus obtain a reward among all the members and obtain fair compensation for the work done.
Joining under a pool guarantees us more possibilities to solve a block and therefore obtain the reward. If we did it individually by user it is possible that we will never get a reward either out of pure probability or because we have less computing power than the competition.
Thus, associating with other users that provide mining machines guarantees that we will obtain a reward with greater probability.
Recommended BTC mining equipment in terms of efficiency
Bitmain Antminer S9
Being one of the most recent models in ASIC (application-specific integrated circuit), there is no doubt that the Antminer S9 is the leader currently used for bitcoin mining. This system has a hashrate (the range used to measure hash codes) of 13.5 TH / S, so its speed is guaranteed to analyze the hash codes within the network.
Clearly it is not a very economic equipment, although the price remains considerably accessible, (it costs $2,100, give or take). This circuit uses a chip Bitmain BM1387, the most modern of this company and that consists of a FinFET technology capable of performing 0.098 J/GHs, so it turns out to be the fastest bitcoin chip up to the moment.
While this is being a successor to the powerful Antminer S7, the S9 exceeded by its enormous power and twice the efficiency, in addition to only consuming 1350W of energy.
Bitmain Antminer T9
In the case of the Antminer T9 we have a 16nm ASIC chip that also demonstrates enormous power and capacity for bitcoin mining. It has a hashrate of 11.5 TH / S, and an efficiency of 0.126J / GH, so speed is not a problem for this device.
While still based on the same circuit of the Antminer S9, it does not have the same amount of chips and has a slightly higher frequency, although more limited. Clearly, due to this, its price decreases, hovering mostly between $1,500 and $1,800, although the efficiency is not the same as that of S9.
This device has two cooling fans that prevents overheating and there is no problem if we want to save electricity, it only consumes 1372W.
Is it only possible to mine crypto with this type of Hardware?
Not necessarily. With the development of this activity, Cloud mining was implemented, defined as the process by which miners process, from the cloud, bitcoin transactions and, for their services, are automatically rewarded by the system and, through the rewards , by the users.
In the cloud mining the mining process is done remotely, since it uses a data center with shared processing capacity and, therefore, allows users to dispense with the necessary hardware to undermine, since a company is usually hired.
For beginners, the advantages of cloud mining are based on not having a computer at home making noise or consuming large amounts of electricity, as a company is hired to do so. We should not get involved with equipment updates, because a certain power is previously established. We do not have to personally customize or configure the miner, so it is not necessary to have a very deep knowledge of the area. For these and other reasons, the expenses tend to be more predictable and point to a better planning of our investment.
In case of starting a deal with a Cloud Mining company, it is necessary to choose a company with an unblemished record and good reputation, since there have been numerous frauds on the web by platforms that suddenly stop providing their services or simply never made. Although establishing a deal with a responsible server can result in a profitable experience, many users prefer the excitement and commitment of acquiring a personal team to start their own mining activities at home.