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Is it Worth Mining Bitcoin

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Offline kat

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Given the buzz surrounding bitcoin and cryptocurrencies generally it's only natural to ask "is it really worth mining for bitcoin" and just what is "the truth about bitcoin mining". Well, TL:DR; it's not really worth doing except for the fun of it, the experience, or as an exercise in it's own right [00], largely because mining is now done at such a colossally industrial process, all that remains for the individual are the metaphorical scraps that go unnoticed, largely because they're not worth picking up.

So, is it really worth mining for bitcoin using a personal computer?

Short answer is "no".

Long answer is "not really".

Assuming the question is being asked from the average normies point of view, a person just wanting to use their computer, laptop or mobile device to mine rather than hardcore miners using dedicated ASIC hardware designed specifically for the job, before mining for bitcoin the digital prospector has to consider the following;
  • The cost of electricity needed to run the equipment.
  • The (current & future) price of bitcoin (or whatever hash is being mined, the 'coin' herein).
While both concerns are important for figuring out whether it's worth mining for bitcoin, the first, the cost of electricity, has greater influence over a decision to mine than the latter, the price of bitcoin, because power prices determine running costs of mining equipment, which in turn defines the break-even point for resulting return of investment/value (RoI/RoV).

Simply put, if it costs more to run the hardware used to mine coins than current rewards from mining then it's simply not worth doing, except as an exercise in its own right, because the prospector is more-or-less always then running at a loss.

In other words then, as of writing the only way it would be cost effective, even 'profitable', to mine bitcoin is through use of 'free' electricity, not in the ‘someone else is paying for it’ sense, but rather power that is supplied locally, perhaps as self-owned solar, wind, water etc., anything otherwise generated 'off-grid' or in the proverbial backyard. If this is the case then there is no 'cost' against which mining needs to be leveraged (notwithstanding costs associated with maintenance and upkeep of all the hardware used in the process, from solar panels to graphics card et al) so bitcoin mining can be done full steam ahead.

With that said, in terms of profitability/RoI/RoV, the aforementioned is compounded further by;
  • The rate at which mining occurs [1].
  • How much reward there is for doing said mining [2].
  • If there even is a reward for doing so [3].
What this all means in practice is this; coins are generally highly divisible by nature, some by as many as twelve decimal places e.g. 0.000000000000 or to the trillionth decimal. So whist their availability may be exponentially greater than other (fiat) physical currencies like the US Dollar, it means the potential share per mining session is going to be relatively small, even accounting for inbuilt scarcity that underwrites the value of cryptocurrency as a whole. In other words, whilst a successfully mining session might return 35,000 'points', if the sessions results are even accepted on the network, that might translate to earning 0.000000035000’s (35 ten-millionth’s) of a coin. If said coin has a market value of $100.00, the 35,000 rewarded 'points' would be worth fractions of a fraction of a cent (tens or hundreds-of-millionth’s or billionth’s) – the coin itself would have to be worth high millions, even billions or trillions for any mined points to be reasonably convertible to cash of any value for the costs and effort used to mine it.

And this is where the dilemma occurs for ordinary people wanting to mine bitcoins with their computers or devices, it’s simply no longer economically feasible if power is being fed in from the grid and has to be paid for; it will cost more to mine than can be earned from mining [4].

The bottom line on mining for bitcoin these days is this; it’s potentially more profitable to simply buy and trade bitcoin or hold on to it to capitalise on potential gains from exchange/commodity increases, especially as Governments the globe over are turning to digital currencies knowing their cash reserves are falling well short of their debt obligations.


Footnotes:
[00] There is another reason for mining and that's to acquire coins in the present as a bet against a future price rise of the coin mined. In many ways mining cryptocurrencies with this in mind is akin to purchasing stocks or shares, owning gold, silver etc., or owning other price-based commodities where gains can be had if the price of the item held increases. For crypto this essentially means betting the current costs of mining against future price increases. Cryptocurrency mining with this in mind generally means being more selective with coin choice as not all crypto is equal, the more popular a coin is now the less profitable it is in the present.

[1] Mining bitcoins tends to cycle hardware to its limit – looking at Device Manager in Windows for example, will typically show mining software running at between 70% and 95% CPU use depending on where the calculations are in the process and/or whether the computer is doing something else at the time (like opening and viewing Device Manager). It should be noted that mining bitcoin using a CPU tends to be more energy intensive than mining using a discrete graphics card (CPU vs GPU mining). It also producing more heat, uses more power typically have a lower session throughput.

[2] The reward for mining sessions depends on what’s being mined, it isn’t fixed in the sense that ‘X’ outcome occurs with ‘Y’ input.

[3] Depending on the mining software, pool network and other factors, mining is typically 'sessions' based that can last from a few minutes to a number of hours. Each session has to be completed in full for the miner to have any change of earning a return (hence mining often being compared to entering or participating in a lottery - there is a high degree of chance involved, especially when working as a solo miner). This is also conditional on the results of the session being accepted. If not, and sessions are rejected, no earnings occur so all the costs incurred for that sessions, the electricity used etc., is essentially lost.

[4] Most bitcoin mining now is done in locations where electricity is cheap enough that none of the above matters, by institutions that supply their own power, or those that are heavily subsidised.



Offline ratty redemption

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interesting, why are gfx cards used for mining? do they preform calculations that cpu's don't that is required for mining?


Offline kat

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Broadly speaking it's to do with the way GPU's can be more specifically tasked to run the math to find/verify blocks on the blockchain. It depends a great deal on the type of 'coin' being mined as not all can be mined using GPU's and instead have to be done on CPU. There's more to it so it'd be worth doing a search as it's too technical to cover here in a way that isn't said elsewhere - the above is posted here because the answers to the questions posed aren't answered quite so succinctly (scattered all over the place).


Offline ratty redemption

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