What is Bitcoin Mining? The most trending topic at the present time is Bitcoin mining and has become so popular that even laymen are resorting to this. There are many important things that should be kept in mind for mining Bitcoins.
For example, previously we discussed that mining Bitcoin consumes a lot of processing power. In addition to this, the processing power is so much that people are purchasing specially designed machines for mining Bitcoins.
But why are we clearing our concepts regarding Bitcoin mining? Why do we even need that? It is because Bitcoin will soon become the future of this world.
The transactions will be done using Bitcoins and other cryptocurrencies instead of physical currencies. When we talk about Bitcoins, the most important thing regarding Bitcoins that comes to mind is Bitcoin mining.
Bitcoin mining is the process of verifying transactions using Bitcoins on the Bitcoin blockchain. If you want to mine Bitcoins, there are certain factors on which it depends. You must know these factors.
There are three factors on which mining Bitcoins depends. These are:
- Computer Hardware
- Prices of the Bitcoins
- Electricity Cost
1. Computer Hardware (Bitcoin Mining Factors)
Bitcoin mining heavily depends on the hardware of your computer. It is because mining Bitcoins is a process that costs a lot of processing power. In simple words, it looks quite simple but it is not simple and easy for the computer. Basically, the computer has to solve a calculation or puzzle. When the computer solves the calculation, it earns a Bitcoin.
These calculations are called calculations just by words. But the technicians have increased the difficulty level of these calculations to such an extent, that the computers can result in overheating due to solving these calculations.
In addition to this, we can say that it isn’t as simple as it looks. So, if you want to enter Bitcoin mining, you must have heavy processing power with you.
Only then you can stand in the Bitcoin mining competition. I am referring to it as a Bitcoin mining competition because your computer is not the only one which is solving the calculation. Several computers (called miners) connected in the ledger are solving these.
If any computer completes the calculation first, it will earn the Bitcoin and the rest of the computer’s power will be wasted in the middle. It is like playing a video game and losing the level at the very end without saving it. All the efforts have gone useless.
2. Prices Of The Bitcoin.
Another important factor that depends is the price of Bitcoin. We know that the prices of Bitcoin are a major factor in having a profit or loss in them. Suppose you earned a Bitcoin today.
This profit or loss factor is important in all kinds of business and trading. Even if you are a job holder, the thing that will trigger you to keep up with your job is your profit through that job.
The same case is with Bitcoin mining. You will only continue to mine Bitcoins if you will get a profit from mining them. Because a lot of people prefer that it is better to invest in Bitcoin trading instead of mining.
Because trading can prove more profitable as compared to Bitcoin mining. But both have their own merits and demerits. If you mine Bitcoin, you don’t have to wait for its prices to rise, you can sell it the day you’ve mined it.
But on the other hand, you will have to wait for its price to increase from the original price at which you purchased the Bitcoin. So, in this regard of profit and loss, the prices of Bitcoin matter a lot in Bitcoin mining.
3. Electricity Cost (Bitcoin Mining Factors)
The most important factor on which mining Bitcoins depends is the electricity cost. Not only this, but it is one of the biggest drawbacks of Bitcoin mining. Mining Bitcoins consumes extremely high processing power of the computer.
Hence, it results in a high cost of electricity to the user. An important fact about electricity costs is that Elon Musk and his company rejected Bitcoins.
It is true that they were the first ones to accept this currency, but now they are the ones rejecting it. It is because according to them, mining Bitcoins costs a lot of processing power.
Eventually, this results in high consumption of electricity as well. According to Elon Musk, high consumption of electricity is not good for the environment. Hence, he and his companies rejected Bitcoins.
From this scenario, we can assume how much electricity can be consumed by a miner mining Bitcoins. Let me elaborate. According to my assumptions, if you have an average computer. I mean a computer that is not too much powerful or comparative to others.
This kind of computer can consume electricity for a month in a week or half week. From this, we can estimate how costly can it prove.
We can say that Bitcoin mining has its benefits as well as losses. I am not saying that mining is bad. I am just saying that you should resort to Bitcoin mining only if you can afford these three factors. If you cannot afford any of them, then it is better for you to resort to any other field relating to Bitcoin.