The term Bitcoin mining can be more confusing than not. Firstly, the image of mining you most likely have is probably of the everlasting drilling and underground boring, which just doesn’t click because Bitcoin is decentralized and lacks any physical token.
Bitcoin mining involves more of maintaining the blockchain ledger rather than actual mining. Put simply, Bitcoin mining is the decentralized way of updating the blockchain ledger without giving or centralizing power onto a third party or entity. To mine Bitcoin, you have to guess a 64-digit hexadecimal number that complements a blockchain equation. The transactions get compiled into blocks and uploaded onto the home blockchain server, where it gets confirmed by other users. The system then generates a certain number of bitcoins as a reward for you. The human brain is simply not equipped for such high-capacity computations, so high-powered computers do this instead. This is not as simple as it seems because the mining process is influenced by some algorithmic rules set by the Bitcoin creator which include:
- The difficulty of the Bitcoin mining process increases at a pace of every 2,016 blocks. The more the mining power, the more difficult it is to guess the number correctly.
- The amount of every bitcoin obtainable from each mining process is halved every 210,000 blocks or four years.
Although, logically, the higher the mining power, the greater your chances are at guessing the answer correctly, but simple statistical probability proves that impossible. The probability of you guessing the answer correctly stands at 1 in over 17 trillion.
Over the years, the increase in mining power and hence, the difficulty in mining Bitcoin have led to the rapid shift and development in mining technology from the first-generation miners use of CPU to GPU mining to FPGA mining to the present Application Specific Integrated Circuit (ASIC) mining technology.
Due to the high-cost investment in Bitcoin mining today, as an individual or a small business, to make any substantial profit whatsoever from it is practically impossible as you would be up against top governmental organizations and technology giants.
So, what can you do?
Don’t get me wrong, it is still theoretically possible to mine bitcoins with your PC, but the energy, electricity, and time you would need to compensate for its slow processing speed (hash rate) will significantly outweigh any profit for mining Bitcoin you hope to achieve.
To beat the giants at their game, you have to be part of a giant too.
You could simply join a mining pool. Mining pools are teams of a smaller organization that joins their mining power together.
The proceeds and bitcoin reward are shared among the members of the pools based on their contributing mining power.
What is the future of Bitcoin mining?
Though the future profitability of Bitcoin mining is looking more bleak than great, the future of Bitcoin mining is subjective to every specific business and miner. Therefore, before you write off or kick-start your plan to mine Bitcoin, you need to determine whether mining is for you. Consider the following factors that affect Bitcoin mining:
- Hash rate
- Blockchain reward
- Bitcoin mining difficulty
- Power and electricity cost and consumption
- Bitcoin annual difficulty increase
- Bitcoin pool membership fee
Inserting the value of each of the above in a bitcoin profitability calculator will estimate your Bitcoin mining future. Your resulting negative or positive value will give you a personalized answer to your question: What is the future of Bitcoin mining?