When the cryptocurrency, and especially the bitcoin, was in its infancy, it was actually possible for anyone with a powerful computer to mine bitcoins.
Nowadays this has changed and bitcoin transactions still consist mainly of buying and selling this virtual currency. However, there are still a few large players on the market who have computers and power that are powerful enough to mine bitcoins themselves. Whether this is still possible for you as a small(er) player and whether it still manages to generate an attractive return, you will find out on this page.
What is cryptocurrency mining?
In this example, let us use the bitcoin more specifically. It works as a digital decentralised currency based on a public log file. This log file contains every transaction ever executed by bitcoins. In practice, we call this public log file the ‘blockchain’. The name is derived from the fact that the file groups several so-called blocks.
In practice, however, a block is nothing more or less than a special data block that acts as a solution for a mathematical formula. The moment the user is able to crack the mathematical formula, he is rewarded with a certain amount of bitcoins. However, this does not mean that bitcoin mining is merely a reward system. It is also a form of control. Indeed, the minus of cryptocurrencies such as the bitcoin ensures in practice that all transactions sent over the network must comply with the applicable protocol of the cryptocurrency in question. In other words, a transaction cannot be executed twice just like that.
How does cryptocurrency mining work?
Specifically for the bitcoin protocol, a solution for a mathematical formula must be found at the time of writing every 10 minutes. If users fail to achieve this, the difficulty of the formula will be reduced. Will a particular party succeed in cracking the formula? Then she goes up. In addition, the protocol at the time of writing also states that a maximum of 21 million bitcoins can be created.
When the bitcoin was launched in the year 2009, only a limited number of users were interested and active in it. Today, this number has grown explosively, which has significantly reduced the chances of profitability for small users. Nowadays, the mining or ‘minting’ of not only bitcoins, but also of many other cryptocurrencies is mainly described as a very large game of chance.
The process of cryptocurrency mining always takes place by using a certain computer system which is equipped with a graphics card or GPU as well as a processor or CPU. At first glance this seems to be a very accessible principle and for many years it was, but nowadays the reality is somewhat different. As an individual, it has become extremely difficult to have sufficient computer power and, moreover, power to achieve efficiency with the mining of bitcoins or other cryptocurrencies. This does not mean, however, that you can no longer play any role in the mining of crypto. Many small users choose to turn on their computer as part of a larger group of miners. We call this a ‘mining pool’. By reducing the group, the chance of success is not only increased, but the costs that have to be made are also logically much lower.
How efficient is cryptocurrency mining?
It is impossible to offer you a ready-made return in terms of cryptocurrency miniaturisation. In order to calculate the return, we need various data. And don’t forget the costs you have had to incur yourself, for example in the areas of energy and hardware. Specifically for the energy cost, a power requirement of 175 Watts per hour can be expected per graphics card. In addition, the motherboard also has a certain current requirement, namely 200 Watts per hour.
For a setup consisting of 6 graphics cards as well as 1 motherboard, this provides an overall current requirement of 1,050 Watts + 200 Watts. This means a total consumption of 1,250 Watts or 1.25 kWh. At the moment that the mining rig would turn around the clock, this would quickly result in a cost of 2,500 euros at the end of the year and with the current energy cost. Of course, we haven’t talked about the investments you had to make in the graphics cards and the motherboard yet. In practice, the most competitively priced set-up quickly costs you around 3,000 euros. Going for a more advanced option? In that case, the cost can be as much as EUR 9,000 or more.
Is cryptocurrency mining still worth it?
The information in this article may appear somewhat negative. This does not mean, however, that there are no more opportunities for people who want to mine cryptocurrencies themselves. However, it is always important to reflect on the investment required and to take account of the high level of competition. The monstrously high amounts that could be achieved in the past with cryptocurrencies belong nowadays or in the past, with the right set-up and by being part of a good mining pool it is possible to earn some nice things with the mining of cryptocurrencies.
Cloud Mining: Outsource cryptocurrency mining
Do you want to start with Bitcoin or any other cryptocurrency mining, but don’t feel like investing in mining hardware? Then you can choose to use cloud mining services: there are several companies that you can pay an X amount to use their mining hardware and power supplies in modern data centers for a certain period of time, which are specially designed to miniaturise cryptocurrency.
There are several providers of cloud mining programs, but make sure that you can’t trust every company just like that: it has happened more often that websites offer to mine bitcoins or ethers for a low price and therefore a high return, but that then it turned out that it was a pyramid scheme / ponzi scheme and there was no mining equipment at all.
The most famous cloud mining companies are Genesis Mining and Hashflare, both of which you can trust. An advantage of Genesis Mining is that they support more cryptocurrencies and that the website is also available in Dutch. Moreover, this organization is without a doubt the largest cryptocurrency cloud mining company.