Mining is the extraction of encrypted and limited in the amount of cryptocurrency program code and calculations based on it, the required combination for which is formed by the method of selecting a set of numerical variations. In this article, you can know about how to bitcoin mining in 2020 – farm equipment, programs, mining pools.
The environmental friendliness of the production of cryptocurrency itself – mining. How much electricity do miners consume, and will they lead the planet to disaster in the pursuit of the unrestrained growth of bitcoin?
Most critics are in no hurry to share their reasoning, sources and calculations, which is why it is quite difficult to confirm or deny their position.
Three ways to organise Mining Bitcoin
- Cloud mining. The most efficient bitcoin mining option in 2020 because provides the maximum profitability and does not require your participation in the technical part of the process at all, all that is required from the user in cloud services is to replenish the balance (buy a contract) and withdraw funds (bitcoin obtained by mining on rented power)—the rating of the most reliable and profitable cloud mining services for 2020.
- Extraction in pools. Many users unite into a virtual pool, connect their mining equipment to it, jointly mine and divide the cryptocurrency according to their share of participation. Even large cloud mining services most often mine BTC as part of a pool.
- Solo loot. You purchase the equipment yourself, find coins and keep all the income for yourself. For 2020, Bitcoin solo mining has completely outlived its usefulness, since there is too much total power in the world and more than one large miner is unable to compete with the pools.
What is Bitcoin mining?
In a nutshell, mining is the mining of cryptocurrency (coins or tokens). Since Bitcoin is the most popular among digital currencies, it is worth understanding the intricacies of its mining. First of all, you need to understand the essence of mining. The mining process is quite complex, time-consuming and requires a lot of computing power. Hence the name – “mining”, that is, “extraction”.
The cryptocurrency mining algorithm itself, from a technical point of view, looks like this:
- Specialized software, using the power of the computer hardware, solves the problem defined by the cryptocurrency system.
- When a solution to this problem is found, the result is a block of digital data that satisfies all the requirements of the system.
- The block generated by the program is written into the blockchain base, and the miner or pool that created it receives a certain number of coins as a reward.
Of course, this open archive does not store the original, but the encrypted codes of the coins.
That is, it is impossible to simply replace a block in the Blockchain chain without changing the entire chain, or at least most of it. A new block in this chain is born approximately every 10 minutes, and its size today should not exceed 1 MB.
Cloud mining of bitcoins
Bitcoin cloud mining is a much more promising way to make money than using mining on your equipment. This method will require less investment from the user, but the general principle remains unchanged – the more money you invest in the beginning, the more profit you will be able to gain since at the time of the purchase of power. So, the value of new contracts for cloud mining services also rises.
To mine Bitcoin in the cloud, you need to do the following.
- Register a Bitcoin wallet, where the reward will be automatically transferred.
- Choose a cloud mining service and register on it.
- Buy (rent) capacity from service; a contract is usually concluded for 2-3 years.
- Receive a profit, the amount of which will depend on the production capacity provided by the miner to the pool.
Cloud mining has several advantages over classic cryptocurrency mining.
- Firstly, expensive equipment for mining is not bought, but rented, which is much cheaper. Since services like IQMining, HashFlare and Genesis Mining manufacture ASIC equipment themselves (more precisely, they are subsidiaries of manufacturers);
- Secondly, all worries about the uninterrupted supply of computers with electricity, the safety and health of the equipment fall on the shoulders of the organizing company;
- Thirdly, such cryptocurrency mining will be guaranteed to bring passive income, regardless of the health of the equipment; in this case, any major service lays reserve capacity.
You can look at the full list of TOP-10 Bitcoin cloud mining sites here; there are separate reviews for the largest of them.
Farm for mining bitcoins
There are several types of farms, among the main types it is worth noting:
- farms on video cards (not effective for 2020);
- FPGA farms (not efficient for 2020);
- farms from ASIC miners.
Note! Initially, GPUs were great at mining digital coins.
The thing is that today the blockchain technology has become much more complicated, which is why the old equipment can no longer cope with decoding blockchains. A modern farm for mining bitcoins is a complex of equipment that includes several ASIC devices, of different or identical capacities, collected in one place to increase the speed of mining, ease of maintenance and cooling.
ASIC miner market leaders
Until 2020, about 500 technological solutions were released by various manufacturers. The growth of the rate and popularity gave rise to competition among dozens of IT companies that produce mining equipment. CoinTerra was one of the first to enter the mining hardware market, presenting the TerraMiner line of devices. Which has its own liquid cooling system and a set of chips that provide impressive computing power?
KnCMiner was the first company to use chips of its own design, creating the most high-performance devices, the power of which allowed at the time of the release of the first model to earn at least 1.5 bitcoins per day. At the same time, KnCMiner ASIC systems are about two times more expensive than CoinTerra devices. However, despite the high price of the devices, it is the equipment from KnCMiner that currently provides most of the emission of new bitcoin coins.
Other manufacturers offering specialized mining equipment also include Black Arrow and UFOMiners products. The first company on this list has been on the market for a long time. UFOMiners is rapidly gaining popularity, releasing devices not only for mining Bitcoin but also for other popular cryptocurrencies, including Litecoin.
Pools for mining bitcoins
To increase the chances of getting BTC coins, specialized web services (pools) provide miners with their services, which are to use maximum parallelization of computations. This method of mining provides for the pool members to search for their own solutions without linking them to the decisions of others.
Miners provide their computing power to the pool, and the pool for finding the block acts as a solo miner. When choosing a pool, you need to know the rules for distributing rewards and the capacity of the pool. Here we have prepared a detailed overview of all the largest Bitcoin mining pools.
What is the future of Bitcoin
At the moment, Bitcoin consumes mainly very cheap electricity. Miners are pushing each other aside, chasing low power consumption.
In countries where hydrocarbons are difficult to export. But most miners run on electricity from hydroelectric power plants.
Bitcoin will continue to look for such cheap and not used for other purposes sources of energy since mining in cities, or industrial centres will continue to be unprofitable. It is possible that you spend more on air conditioning or heating than the miner can afford.
How much does bitcoin mining cost
Miners are ready to burn energy at the same rate as their reward grows. Block 498048 brought the miner 14.6 BTC, and this is a fairly typical result. Taking into account current prices, this is approximately equal to $ 230 thousand. If we take the current cost of electricity at $ 0.02 per kWh and consumption at 1100 MW, the price of each unit is 183 MW or $ 3600.
If the price of bitcoin stabilizes and enough miners enter this market. They can expect to see a fivefold increase in their energy consumption in the near future. In the distant future, Bitcoin mining will become less and less profitable. The current average (12.5 BTC per block) will halve every four years until it reaches zero. Transaction fees (currently two bitcoins per block) are likely to remain the same.
In this case, the consumed energy will depend on the size of the commission and on the price of bitcoin.
Where does this energy come from
Bitcoin in the future will continue to operate from hard-to-reach sources such as hydro, geothermal and solar power plants. The world’s financial systems require many other resources besides electricity to run servers. And the very printing of money requires cotton or even livestock farms.
Given the trend of Bitcoin mining towards renewable resources and the fact that the traditional banking system is far from environmentally friendly, it is possible that cryptocurrency has a positive impact on the environment.
Basic concepts you need to know before getting involved in mining bitcoins.
- Hashrate is the cardinality that is applied to the specific mathematical calculations that make up the block generation process. Miner programs have different hash rate sizes.
- There were fifty of them, after the formation of 210 thousand blocks.
- The difficulty of mining (bitcoin difficulty) – it grows with the increase in network power. That is, the increase in the number of miners directly affects the complexity of solving mathematical problems.
The price of electricity (electricity rate)
- in each region, it is different, and since the process requires very high energy costs. Its cost is also an important indicator of future profitability.
- Power consumption – the “appetite” for different devices is different, so without information about the power consumption of your miner, you will not calculate future income.
- Pool fees – we have already written that to work, you need to become a member of one of the many pools (groups of the same as you are, crypt-miners).
- Time frame – the time you devote to mining.
- The fall in the profitability of production for the year (profitability) is an essential but challenging to determine indicator. Since no one can accurately predict how much the number of participants will increase and to what extent the complexity of production will increase in a few months.
- Conversion rate is another variable that does not accurately determine future profitability. The value of the quotes is not very important if you will save the mined coins for the time being. It is of great importance if you prefer to immediately convert all the mined bits into your usual money.
Read More: Debt Settlement Company: 5 Questions To Ask
Pros of cloud mining
Cloud mining sites have the following benefits:
- The user does not need to be tech-savvy, figure out which is more profitable to buy equipment or assemble a mining farm – all units are already configured and working. The miner only needs to register in the system and pay for the services.
- This is beneficial if the country has high electricity tariffs. In addition, there is no additional stress on the wiring.
- Cloud mining of cryptocurrency does not require constant monitoring. The user does not need to monitor the condition of the equipment: mining of coins is an automated process.
- Cloud mining of bitcoins is available to every user. It is difficult, unproductive and costly to mine this cryptocurrency alone.
- Low entry threshold – you can try your hand at a cheap tariff plan, and only then invest larger amounts.
Risks and Cons of Cloud Cryptocurrency Mining:
- Even the best cloud mining is not immune to bankruptcy and hacker attacks. Craftsmen can hack the database and withdraw funds from the system. It is worth choosing sites that provide frequent payments and withdraw money to your wallet.
- High risk of fraud. Too high profitability of cloud mining is the first sign of hype. Most likely, scammers sell non-existent capacities to clients.
- You cannot control the equipment; it is not always possible to change the type of cryptocurrency if a more interesting option turns up.
- Long return on investment.
- An opaque mechanism for the functioning of such companies.