Bitcoin Mining

Bitcoin Mining

Reuters estimates that every four years, the reward for Bitcoin miners is cut in half, in a move originally designed to keep Bitcoin inflation in check.

Today, most of the world’s Bitcoin is mined in giant server farms, most of which can be found in China close to cheap energy sources like hydroelectric dams or solar farms.

By working out of a large institution devoted to Bitcoin mining, processing power can be pooled and the odds of finding new Bitcoins are more likely.

The electrical and equipment-related expenses for Bitcoin mining generally overwhelm what returns can be earned, and so investors typically find that it’s smarter to buy the Bitcoin outright rather than invest tens of thousands of dollars in the hardware to fish for them.

Bitcoin mining icon

Bitcoin is a form of digital currency that can be transferred peer-to-peer with no middleman.  A key element to the success of Bitcoin technology is ensuring both its accuracy and the methodical release of additional currency over time.

To accomplish both, the Bitcoin software leaves room for miners.  Miners obtain Bitcoins by completing tasks, which are math problems that miners can access with sophisticated enough equipment.

When Bitcoin was first introduced a decade ago, the cryptocurrency could be mined using a laptop.  That is no longer the case, as a single computer would yield virtually no return.  The simplest attempt to mine cryptocurrency today would require a specialized rig with multiple video cards.  These particular video cards are in record-high demand due to the cryptocurrency chase, and the shortage has made higher-end video cards scare and expensive.  The physical room in which Bitcoin is mined would need to be air-conditioned 24 hours a day, as all of this equipment running simultaneously will produce excess heat.

In addition to the high utility bills and hardware costs, the odds of mining Bitcoin successfully is extremely low for the individual investor.