Is Bitcoin Mining still worth it
BBN Times does a great job of explaining bitcoin – Bitcoin is a digital currency that is built upon the underlying technology known as blockchain. The blockchain is a public, distributed and decentralised ledger where transactions are stored. The blockchain is, in simple terms, an ongoing list of algorithms that verify and store transactions.
Knowing this, you can see the need of processors to keep the blockchain working. The processors in the blockchain are referred to as bitcoin miners. The technology needed to process the blockchain has changed over the years. Around the end of 2010, it became necessary to use a GPU rather than a normal CPU to run the complex system. The GPU is like the processor in games. they are programmed to do specific tasks, and optimized to do it very well. In 2013 the ASICs (application-specific integrated circuit) came into play. These are devices whos sole purpose is to mine bitcoin
You might be wondering what changed. I am sure you have heard about people running a miner on an old PC. Well, back in 2008, when Satoshi Nakamoto designed the system, they knew there would be the need for these processes in order to keep it honest. In order to incite people to set up “Miners” to process the transactions. Satoshi Nakamoto knew the people would need some kind of compensation for this. – So they set up the mining program. Each time a bitcoin transaction happens, the transaction creates the ledger entry, and sets up an encrypted key of sorts. These are a 64 bit key. A 64 bit Key looks like this (0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598ee). A Miner finds these transactions and tries to get the key figured out before anyone else, so they can process the transaction and get the small payout for the verification process.
Now back in 2009, when Bitcoin got started you would get 50 Bitcoins for processing a block of transactions. This sounds like a lot, but Bitcoin was only a penny each. Part of the design is that in hopes that bitcoin would increase in value, the payouts would be less, so it was set up that every 4 years the payout would cut in half
|Year||Per Block||Bitcoin price||Approx. Money Made Per Block|
This would look like there is just a ton of money to be made, but lets look at this
|Year||Available bitcoins to mine|
Satoshi Nakamoto designed the system in a way that it would limit available bitcoins to mine to keep the mining from running out of hand. So every 4 years the amount you make per block processed cuts in half, and the available bitcoin is also cut in half. This makes it so that your miner has to process more and more transactions to get less and less bitcoin. The HUGE amount of transactions needed has created the need for the ASIC miners. The problem with the ASIC miners is that they run about 3500 watts and run 24X7. So if you were to go out and but a decent 70 TH/S ASIC miner today, and you get a GREAT deal of $6,700.00 for the miner, and power is $0.14 a KW this chart shows what you would actually make
|Per||Pool Fee||Est. Rewards||Rev. BTC||Rev. $||Cost||Profit|
So it would take you about 3 years to pay off the miner after paying your electrical bill. Then in the 4th year you would make the $2511.98 profit, then Boom the 4 year mark hits and The mine % cuts in half again.
Bitcoin Mining was very profitable back in 2009 – 2017, but the amount available and the huge competition for less and less has made bitcoin mining not such a profitable option in 2021