Bitcoin Mining

Crypto Mining

Mining cryptocurrencies are something that not many people are very familiar with. It takes quite a bit of education to be able to get started depending on which direction you take. It is also an ever-evolving space with many of the involved variables changing regularly, sometimes daily. There are two main reasons to mine crypto, some mine specifically to help individual coins’ networks’ grow and be stable. With each new miner that enters the space, that respective network gets stronger. Without miners, there would be no network. Blockchain technology relies on mining to be the backbone of the network. Many people mine cryptocurrencies for the monetary reward it provides for confirming transactions on the network. Depending on the coin, the reward available varies. Since mining has gotten increasingly more difficult for many coins, this reward is not always worth the cost. However, the main attraction to mining is in regard to accumulating coins, typically the cost of minting coins is less than purchasing the coins themselves.

Here is an example of Bitcoins mining protocol; For Bitcoin, there is an event that is called “halving,” that happens every four years. When this occurs, the reward per block mined is cut in half. [25 BTC / block reward(Prior to halving)— 12.5 BTC / block reward (After most recent halving)] What this means, is that for each “block (group of transactions)” that is mined, the payout would be 25BTC before a halving event, but only 12.5BTC after a calving event. Then dropping to 6.25BTC after the next halving event, etc. A number of Bitcoins that are mined are also at a controlled pace, with the final Bitcoin being mined in the year 2140. Mining difficulty is what keeps this pace consistent. 1 block is to be released every 10 minutes, regardless of how many people are mining on the network. The more people that begin to mine, the higher the difficulty goes, this difficulty is what controls the release of Bitcoin’s. Many variables play a part in making the decision whether or not to start mining. Make sure you address all of them prior to making any final decisions. The upfront capital, as well as electricity costs in your area, are two of the biggest factors. Taking advantage of the opportunity to mine a coin early can be very profitable in the long run. Many people will mine a coin, at a financial loss, in hopes that down the road the coin will be traded at a high value.