Is Bitcoin Mining Profitable?
Is Bitcoin Mining Profitable? Bitcoin mining offers many private investors a chance to participate in Bitcoin hype without necessarily having to buy Bitcoins. After all, not all investors are prepared to invest five-digit amounts in order to acquire the cryptocurrency.
When mining, you participate in the production of Bitcoins by purchasing computing power. Special purpose computers solve complex computational processes and ensure that Bitcoins are created. These are paid to the investors as profit. The more computing power investors buy, the higher the number of Bitcoins that are distributed.
When mining, however, it is not necessary to invest large sums, it is possible to gain entry with small three-digit amounts, much to the delight of many private individuals!
Many investors still want to know before investing whether Bitcoin mining is profitable because fixed numbers of Bitcoin or contractual guarantees of profit are not offered in return. The mining process is far too complex for that. Mining is profitable only when the break-even point is reached, so the results balance the initial investment and the profit zone begins.
It must always be kept in mind that it may take a while to reach the profit zone.
Is Bitcoin Mining Profitable? Provider Choice and Results
Once the euro value of the initial investment has been reached, the mining results are considered net income because then investors finally come into their earnings.
There are several vendors on the market that make mining available to retail investors. If you compare these, you likely arrive at the following result – it takes, on average, about one year until the sum of the initial investment is made back. Due to this, you must have a little patience and see mining as a long-term investment.
The “”difficulty”” level is also a major factor in mining. This refers to the technical difficulty that exists in the computing processes. This increases steadily according to the number of miners. The difficulty level ensures that distributions are continually reduced over time with virtually all providers.
Exceptions are providers that offer mixed mining (mining in several cryptocurrencies), not just Bitcoin mines (e.g. Invia World).
Whether Bitcoin mining is ultimately profitable can be determined only at the end of the mining contract, which includes the total value that has been reached until that time. This depends significantly on another important factor.
Is Bitcoin Mining Profitable? Factors and Dependence
Not only is the difficulty a factor when questioning Bitcoin mining profitability, but the performance of Bitcoin itself plays a significant role. In the past, the value of Bitcoin has risen steadily. Again and again, there were course corrections, after which, however, it increased again.
Assuming that this trend will continue, Bitcoin mining is profitable and when the break-even point is reached, investors can make additional profit by the increase in value. This can reach worthwhile amounts.
Thus, it is possible that distributions over the years are worth twice or three times as much. The reference point is always the euro value of the Bitcoin at the time of the initial investment.
An increase in value can only be taken if the distributed Bitcoins are held by the investors. Anyone who pays off his mining results directly in euros will have much less profit, which becomes difficult when the Bitcoin course falls
. Then, the value of the distributions automatically decreases, no matter how high they are. In this case, there is only one solution – to keep the distributed Bitcoins until the course correction is over and the value rises again.
Other mining factors that reduce profit include equipment maintenance costs and electricity costs, which most providers consider to be the responsibility of investors. Thus, it may be that part of the mining distribution is withheld or automatically taken by the provider.
In fact, individuals can buy mining equipment for themselves at home. Alone, however, nobody can handle the electricity nor the other maintenance costs – mining is profitable only in large pools operated by companies.
Is Bitcoin Mining Profitable? Conclusion
Whether Bitcoin mining is still profitable cannot be answered without taking a number of factors into consideration. It is clear that it needs large mining pools because due to the high costs individuals would not achieve profitability.
Suppliers pour mining results back into Bitcoins, ensuring that their investors’ Bitcoin holdings are growing steadily. However, these must first reach the break-even point. Profit begins only when the value of the initial investment is returned.
The value of the distribution also depends on the price of the Bitcoin. If this increases, mining is absolutely profitable, because digital money increases in addition. If the price falls, the value of the mining results will also decrease. If one concludes that the increase in the value of Bitcoin never breaks off, mining is a profitable, albeit long-term matter.
Alexander Weipprecht is the managing partner of Provimedia GmbH. As a trained IT specialist for application development, he has been advising leading companies on the following topics for more than 10 years: online marketing, SEO and software. Cryptocurrency is becoming increasingly important to businesses and investors. Through Coin Report and Krypto Magazin Germany, Alexander wants to give all people easy access to the subject matter.