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How Profitable Is Cryptocurrency Mining?

The interest in cryptocurrency mining has grown in the past few years with the Bitcoin and many others skyrocketing in value. While you may buy cryptocurrencies in exchanges you can also choose to mine them. Whether it is profitable to mine cryptocurrencies or not is a question which needs to be evaluated.

Mining a cryptocurrency was thought to be no challenge at all because you simply needed a computer for solving complex cryptographic puzzles. On solving these, you would be given rewards. Earlier, this was possible using home computers but things have changed today. Now, mining is far more complicated and demands much sophisticated equipments. The serious miners have built such powerful mining rigs that the smaller miners now find it hard to compete against them. Instead of mining solo, now miners prefer to join a mining pool. When you can share processing power with other miners, you can get rewards faster. Moreover, miners have also started mining coins other than the Bitcoin. So, currencies like Zcash, Monero, and Litecoin etc have now emerged as popular cryptocurrencies.

To see if cryptocurrency mining can be profitable or not you will need to invest in the right kind of mining hardware. This is an expensive proposition as most of the dedicated mining hardware is very high-priced. Miners often end up spending more than $10,000 for their rigs. Besides installing the rig, you will also need to make provisions for uninterrupted power supplies. Power costs are huge because the mining hardware will use up lot of power. While Bitcoin will make you pay up for huge power costs, Zcash and Monero which use GPU for mining will help to save money.

When miners settle for cloud mining they can lease hash power in exchange for fees. So, you basically buy hashing power from remote data centers which are maintained by cloud mining service providers. However, when signing up for cloud mining, you have to make sure the provider is genuine and is not cheating you. Depending on the provider, you may have to pay daily or monthly fees. Some providers even charge maintenance fees while others may have vendor lock-in clause where you are forced to sign a one-year contract. In case the prices of the cryptocurrency you mine falls at this time, you can be at a disadvantage. So, depending on the currency that you mine, it will take roughly five months for you to enjoy profits through cloud mining.

So, to conclude, mining is computationally intensive and there are many challenges on the way. But there are also ways to make mining work in your favor. You can choose to invest in good quality hardware which will give you good returns and work for a longer period. This means buying ASICs which are specifically designed for mining. Mining will also consume much energy and will need water and ventilation for cooling the hardware. So, miners are now looking at hydroelectric plants for such advantages. For these hassles of maintaining mining hardware, people are now moving towards cloud mining.

The early Bitcoin mining days were considered as the gold rush but it is no more likely to bring in profits on a small scale unless you get cheap or free power. At the same time, altcoins have come up which can be mined using GPUs too.

How Profitable is Cryptocurrency Mining?

Mining can be beneficial in the event that you have access to cheap electricity and can construct a perfect mining rig- that too at the right cost. Try not to be tricked by tempting advertisements that guarantee great profits in return for nothing. Most of these companies have built some mining arrangement and are trying to offer you specialized mining equipment, cloud solutions, and software programs but in reality, have zero understanding of cryptocurrency mining. An accomplished miner sure knows that in order to earn profits, you will need to buckle up and observe the mining activities round-the-clock for ideal results.

Cryptocurrency mining requires a lot of discipline, knowledge of the mining equipment as well as the software configurations, and a primary investment in the equipment and the electrical installations. The basic key to effective mining is to keep the apparatus working 24×7 at the optimum speed. The downtime owing to overclocked GPUs, equipment crashes, defective equipment, programming bugs and the like will exhaust the profits quite rapidly. Mainly when the task is controlled by one individual, certain issues tend to crop up you are not close enough to the rig to settle it.

In today’s date, Bitcoin mining is not suited for home-based miners. Large-scale cryptocurrency mining has assumed control over home-based mining and there is nothing much that can be done about it. The best possible thing a home-based miner can do is generate some petty income, if fortunate. Along these lines, the amateur miners need to swing to shift their focus to various other altcoins with a specific end goal, so as to make a profit.

When it comes to cloud mining, there are a good number of organizations which run the mining operations by renting a certain share of their equipment’s processing power. As specified above, there is a definite cost that has been set with respect to mining, and unless you have other sources of income, you'll have to take care of these expenses occasionally by selling cryptocurrencies. Cloud mining organizations settle this by leasing some hashing power as future contracts. They consent to furnish you with a specific hashrate for a specific period, paid in real money. Along these lines, the cloud miners pay off their expenses without cashing out all the mined digital currencies.

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