For those new to the digital asset industry, one would wonder if crypto mining requires the same kind of physical labour used to mine minerals, which is not the case as cryptocurrencies are a digital form of currency. Although digital, it does require immense work for one to mine a currency. The process of validating and logging transactions on the Bitcoin network is known as cryptocurrency mining or Bitcoin mining. Bitcoin mining’s two main goals are to add new blocks to the blockchain, which allows for the decentralised creation of new Bitcoins, as well as to validate transactions in order to stop fraud.
When computers on the network verify and process transactions, new bitcoins are created, or mined. These networked computers, or miners, process the transaction in exchange for a payment in Bitcoin, which is quite worthwhile. However, mining is quite complex.
Although fiat currencies can be used to purchase currencies, Bitcoin is commonly mined using specific software and hardware,
As the industry develops, more software gets introduced as well. Below we will list and discuss the best crypto mining platforms to look out for.
The Purpose of Crypto Mining
Crypto mining, commonly referred to as Bitcoin mining is the process of verifying and processing transactions using computers on a blockchain network in order to create a new Bitcoin, for profit. Bitcoin is the most dominant cryptocurrency in the world, and this is because it is the first ever cryptocurrency created, making it the father and blueprint of all cryptocurrencies that exist today.
All currencies function on a blockchain – A blockchain is a decentralised, distributed, and frequently public digital ledger made up of records called blocks that are used to record transactions across many computers so that any particular block cannot be changed retrospectively without changing all subsequent blocks.
When it comes to understanding the workings of crypto mining, miners have the objective of adding a block to the Bitcoin blockchain. In doing so, they engage in competition with other miners by solving complex mathematical problems. This endeavour demands expensive computer equipment and substantial electricity consumption. The primary goal for miners is to be the first to discover the correct or closest solution, known as the “hash,” and this process is referred to as “proof of work.” As more miners join the network, the task becomes progressively more challenging.
To execute this task, miners rely on specialised computer hardware known as “application-specific integrated circuits,” or ASICs. These devices can come with a price tag of up to £10,000 and require a significant amount of electricity. This has triggered criticism from environmental groups and has a direct impact on the profitability of miners.
When a miner successfully adds a block to the blockchain, they get a reward of 6.25 bitcoins. This reward is halved approximately every four years, or after every 210,000 blocks. As of September 2023, the trade value of Bitcoin is $ 27,139.84 per (BTC / USD) making the value of 6.25 Bitcoins 161,719 USD.
Is Bitcoin Mining Profitable?
Below is a list of factors to consider when assessing the profitability of Bitcoin mining.
1. Electricity Costs:
Mining Bitcoin consumes a significant amount of electricity, and electricity costs can vary greatly depending on your location. In regions with high electricity costs, it can be challenging to turn a profit.
2. Mining Hardware:
The efficiency and computing power of your mining hardware plays a crucial role. Specialized hardware like ASICs (Application-Specific Integrated Circuits) is more efficient than general-purpose computers or GPUs. However, ASICs can be expensive to purchase.
3. Bitcoin Price:
The price of Bitcoin fluctuates widely. Miners earn rewards in the form of newly minted Bitcoins and transaction fees. When Bitcoin’s price is high, mining can be more profitable, but it also attracts more competition.
4. Mining Difficulty:
Bitcoin’s network adjusts its mining difficulty roughly every two weeks to ensure that new blocks are added at a consistent rate, about every 10 minutes. As more miners join the network, the difficulty increases. Higher difficulty levels can reduce mining profitability.
5. Operating Costs:
In addition to electricity costs, miners need to consider other operational expenses, such as cooling, maintenance, and hardware replacement.
6. Time Horizon:
The profitability of mining can vary over time. It’s important to have a long-term perspective and consider factors like the Bitcoin halving, which reduces mining rewards every four years.
7. Market Sentiment:
Sentiment within the cryptocurrency market can influence mining profitability. Events, news, and market trends can impact the demand for Bitcoin and, consequently, its price and mining rewards.
Before engaging in Bitcoin mining, it is advisable that one conducts a cost-benefit analysis to determine if it is profitable as per their goals.
5 best Mining Platforms
The ECOS cryptocurrency platform offers diverse investment options for Bitcoin and other top digital assets. It supports credit card and cryptocurrency payments (BTC, ETH, XRP, LTC). They provide daily rewards for cloud mining and hosting contracts. Notably, they offer a free one-month cloud mining trial for users to explore the platform.
Global enterprise Binance is home to the largest cryptocurrency exchange in terms of daily trading volume. The platform has around 90 million members worldwide and is tremendously well-liked. Being able to mine directly from internet-connected devices like mobile phones, PCs, and tablets is one of the reasons it is so popular. The platform offers a simple sign-up process, a customer loyalty program that can be used to improve mining power and mining sessions that could result in a reward every eight hours.
BitFuFu stands out as a top cloud mining service that is rapidly expanding in the mining of digital assets. Its exclusive partnership with Bitmain, the leading provider of Bitcoin mining equipment, sets this platform apart from the others as expressed by analysts at Bitcoin Apex.
BitFuFu offers a secure and compliant blockchain infrastructure with intelligent hash rate solutions globally. They collaborate with Bitmain, operate over 300MW hosting capacity, and provide user-friendly one-click cloud mining. It boasts low fraud risk and daily payouts.
- Storm Gain
StormGain is an all-inclusive crypto platform that allows one to buy, sell, trade, exchange, and mine digital tokens. However, mining is limited to Bitcoin and can only be done on the platform servers.
Here are some key points to consider regarding this platform:
- Mining operates in 4-hour shifts, requiring users to activate the miner every four hours. It’s important to stay engaged with the platform to maintain your mining activity.
- If you’re not actively trading on StormGain, your mining speed will be significantly slower, resulting in modest earnings of approximately 0.5 USDT (equivalent to USD) per mining session.
- To enhance your mining speed, you must elevate your trading level. StormGain offers a tiered system with six additional levels beyond the starter level. The highest attainable level is VIP 3, which requires traders to achieve a trading volume of 75,000,000 USDT per calendar month. At this elite level, users can enjoy substantial free mining income, reaching close to 16,000 USDT per month.
Boosting your trading level and staying active on the platform are key strategies to maximize your mining rewards and overall profitability. Also, trading, exchange, and withdrawal fees are specific to coin type. But, the deposit is free of any commission.
- Pega Pool
PEGA Pool is a Bitcoin mining platform with a core focus on reducing the environmental impact of mining. They’re all about using green energy, and this is reflected in their fees. If you use renewable energy, they charge just 1% of your earnings. For others, it’s 2%.
Despite the above mentioned, regardless of whether a miner using non-renewable energy or not, PEGA Pool plants trees to balance out the emissions. They’ve planted nearly 150,000 trees, which is like taking 3,843 tons of CO2 out of the air every year.
By incentivising renewable energy use, offsetting carbon emissions, and maintaining high payout rates, PEGA Pool is leading the way toward a decentralised, sustainable, and profitable future for Bitcoin mining. Plus, they have an affiliate program that pays you 50% of the fees generated by the people you refer. It’s a win-win for everyone.
Apart from investing and trading cryptocurrencies, there are other ways of earning a diversified income which involves mining cryptocurrencies. As established above, the crypto-verse is evolving and as it evolves, more software and innovations are introduced. It is thus important to ensure that you conduct your research and consider various factors including sustainability and profitability and whether your chosen platform aligns with your desired goals or not.