In 2022 the price of Bitcoin and other crypto declined substantially. Ethereum went from proof of work to proof of stake. Energy prices went up significantly due to inflation. But now it is 2023, so after all those events in 2022, the question remains, is it still worth mining Bitcoin in 2023? In this article we will look into the current state of mining Bitcoin and how you could start mining Bitcoin if you would want to.
How to mine Bitcoin
Mining Bitcoin is done through mining hardware called ASICs. These ASICs have a certain computational power that is directly linked to the potential amount of Bitcoin you can mine. The higher the computational power or hashrate the higher the chance of finding or mining a Bitcoin.
Pools
The Bitcoin network is extremely large and competitive and as a solo miner without an immense amount of machines it is very unlikely to find a block of Bitcoin. Luckily there is something called pools, a pool is a method whereby all miners of a specific pool, pool together their collective hashrate to find a block of Bitcoin. Once that block is mined the rewards are distributed to all the participants in the pool (minus a pool fee normally).
How the rewards are specifically distributed depend on the type of pool you are using. It is therefore very important to do your own research on what kind of pool you are going to use. Make sure you understand the reward structure, how to set up your miner with the pool and the size of the pool. Especially if you are looking to mine a large cryptocurrency like Bitcoin it might be a good idea to find a bigger pool, a bigger pool might give you a smaller share of the reward but the chance of the pool finding a reward higher. This means that the consistency of your payout is a lot higher as well.
ASICs
If you are looking to mine Bitcoin you will have to purchase an ASIC machine. ASICs are specially made mining hardware to mine a specific crypto algorithm. For Bitcoin there are several different machines you can buy. It is important to make sure you understand the difference between the machines. The algorithm they mine, the energy cost per machine, the efficiency of the machine and of course the price of the machine.
If you would be interested in buying an ASIC machine make sure to purchase from a trusted vendor, so do your research! Also take into account that older machines might be a lot cheaper but the energy efficiency might be a lot worse than newer machines which could have a significant impact depending on your electricity rates.
Setting up a home mining system
When setting up your mining rig or ASIC at home there are several things you will have to take into account. Mainly, where to put the machine and how to keep it cool, plugged in and stable. Mining machines can make a lot of noise and produce heat so it is important to be aware of this and make sure to put the machine in a place it doesn’t disturb anyone.
Additionally it is important to keep the machine cool, lower temperatures means potentially better performance and longer machine lifespan. Therefore, good airflow around the machine is key. Additionally, if you are mining from home make sure to be aware of the power limits of your electrical infrastructure. An ASIC can take a lot of energy, so make sure you know on what fuse you put the ASIC and how much electricity that fuse can take without blowing the fuse.
Energy cost
One of the most important factors when looking to start mining Bitcoin or another cryptocurrency is knowing the potential cost and benefits. The benefits are easy, it is the amount of Bitcoin mined which you can then sell for the current price of Bitcoin. The costs include the costs of the machines but also the costs of running the machines. Every ASIC has a certain wattage and it is important to know how much that will cost in electricity.
First you will need to know your current kwh rate. Then you will have to take the wattage of the machine and calculate how much wattage it will take per day depending on how long the machine will be running. After that you will have to calculate the total wattage per day to kw and then multiply that by your rate per kwh and then you know how much it could cost you.
It is also possible to use tools on the internet that will calculate this for you, all you have to do is fill in your mining machine model and the cost per kwh and the calculator will tell you how much electricity cost per day it will be.Or you can use this formula: kWh = (watts × hrs) ÷ 1,000. It will also tell you how much potential profit there is, websites that do this are for example nicehash or whattomine.
Alternatives to mining Bitcoin yourself
Are you interested in mining Bitcoin or other cryptocurrencies but you dont want to build your own setup at home? There are several other alternatives to mining Bitcoin yourself. For example, cloud mining or crypto mining hosting. With cloud mining you purchase a mining contract for a set amount of time for a set amount of hashrate and can then use that for the contract duration. In the past there have been a lot of cloud mining scams, so make sure to do your own research before starting cloud mining. It is also important to calculate your actual benefit from a cloud mining contract because there can be a lot of hidden costs.
Crypto mining hosting is if you buy or have a machine and let another company host that machine for you. That means that they plug in the machine and keep it up and running while you are able to get the hashrate. Make sure you understand the requirements to do so and also the costs associated with hosting your machine somewhere.