A visible amount of interest has been in cryptocurrencies since 2015 especially when Bitcoin value started to boom up from about $300 per coin to a peak of about $20,000 per coin in December 2017. Although its value dropped down to about $8,000 per coin as of November 2019, yet the same rise and fall in value are observed in almost all the digital coins.
There are about 3,000 cryptocurrencies in the cryptocurrency market. Two of the most prominent competitors of bitcoin include ethereum ($145 per coin, $15 billion market cap, as of Nov. 2019) and litecoin ($45, $2.9 billion).
When it comes to buy and sell Bitcoin on an exchange like Coinbase, you will find this procedure quite simple allowing its users to buy fractions of cryptocurrencies. Most of these users are miners who like to mine their coins. It is up to these miners to choose the suitable option viewing their circumstances.
The system of mining cryptocurrency seems like an easy task that needs no particular intelligence or skills. You just need to set up a computer to help solve complex math puzzles and you can get rewards with a coin or a fraction of a coin. Initially, it was very easy and quick for the miners to get coins only by using the computing power they had in their homes.
We have seen that by 2019, the procedure of cryptocurrency mining has become a little more hard and complex. In the Bitcoin mining system, the reward is halved every four years. The important thing to note is that the experienced miners have devised some enormous possibilities to mine. As a result, this mining process is getting harder for beginnings and smaller miners. You can also find out several mining pools for Bitcoin but they charge you a fee resulting in reducing your profits.
Some of the crypto miners can also select other currencies and coins. But other cryptocurrencies are quite low in value in U.S. dollars. It is possible to use your hard-earned coins and convert them into fractional bitcoinmastery on an exchange, then hope that bitcoin gains in value.
Choose the Right Coin for Mining
It makes no difference what coin you select to mine. In the mining process, you will have to invest in the things like buying a computer setup and in some cases, graphics cards that can cost upward of $700 apiece. You can expect to spend less when you choose a less popular coin to mine, still, its rig would cost you around $3,000. We have also seen some miners spending more than $10,000 on their rigs.
With the purchasing of equipment, you should also keep in mind that you are going to consume a lot of power. In case your power rates are high, you could end up spending more than you earn by mining—especially bitcoin. It is estimated that the electricity cost involved in mining a single bitcoin is more than $3,000 even in countries with cheaper electricity rates. And in the countries with high electric rates, you could spend more than $6,000 in electricity to mine a single bitcoin.
So it could be good to start with a less powerful rig mining alternative currencies that could save you money. Still, you should have to wait and make efforts of several weeks, or even months, to retrieve your original investment and become profitable.
This kind of mining is done by purchasing time on someone else’s rig. There are some reputed mining companies like Genesis Mining and HashFlare which charge you based on what’s called a hash rate—basically, your processing power. When you buy a higher hash rate, you can hope to get more coins in return for your payment, but it will cost more.
This also depends on thecompany you choose. Some companies charge a monthly fee, or you might pay according to the hash rate. In some companies, you will also be charged a maintenance fee. So you can say that cloud miners company which provide facilities to access to bitcoin charge higher rates.
Also in some companies, you would be asked to submit a signed contract which could be one year long. It is like bounding. In this way, if the value of cryptocurrency falls. You would be locked in an unprofitable contract.
The profit in this kind of mining is also very time taking. It depends on what you mine and can take several months before your cloud mining investment becomes profitable.
However, this could be a beer option as here you don’t have to worry about power consumption costs and other direct costs related to doing all of the mining with your rig.
We can conclude by saying that Bitcoin and other cryptocurrencies are a combination of both remain high-risk, high-reward investment options. But we can hope to see their roles getting more powerful in the new economic system in the coming years.