Bitcoin mining was very appealing to anyone that wanted to obtain BTC, especially in the beginning. Today, the role of the miners is equally important, but mining isn’t that accessible as it used to be.
As the popularity and the price of Bitcoin grew in 2021, many individuals want to get their hands on BTC. In fact, the price of Bitcoin in January 2021 is $37,524 and Bitcoin is still in a fantastic bull run. If you also want to get BTC and you’re interested in mining, in this article, we cover everything you need to know about Bitcoin mining in 2021.
The Role of the Miners in the Blockchain Network
The blockchain network is essentially a decentralized peer-to-peer network that encompasses a shared ledger. The network has no central authority, and the transactions are recorded, processed, and validated in the network by the miners. The data shared over in the network is completely transparent, but the sensitive, personal data regarding the identity of the members is always anonymous.
So, the miners need to validate blocks of transactions, and with that, they access their block reward. Whenever a new block of transactions is added to the system, a new BTC is introduced in the network. So, not only they work to secure the network, they need to verify the transactions. In order for the blockchain network to operate properly, miners need to work on the blockchain network.
The main disadvantage of mining is that the block reward is going to be decreased after 210,000 BTC are mined. The event is well-known in the community as Bitcoin halving because every time it happens, the block reward is split in half. In addition to the block reward, the miners also get compensation, transaction fees for their work.
However, until the last Bitcoin is mined, the transaction fees are negligible in comparison to the block reward. From 2016 to 2020, the block reward was 12.5 BTC per block. From May 2020 till the next halving (that will probably take place in 2024), the reward will be 6.25 BTC. So, keep in mind that at the end of the day, this reward is what makes mining profitable. In case you wonder why mining was very profitable early on, the main reason was the block reward that was 50 BTC until 2012.
The Exchange Site
Naturally, as mining got less profitable, exchange sites were considered a better option for investing in BTC. The number of exchange platforms kept growing, and there are plenty of options today online. A great site is Bitcoin Code. In fact, Bitcoin Codes’s automated trading is the main reason why the site is popular among beginners as well as busy professionals.
Because the software is built on top AI algorithms, the process of trading is automated. Therefore, even if you don’t have a lot of knowledge about trading and Bitcoin, you can certainly start trading here.
To help you get the best results, they also offer extensive trading guides and tutorials. Otherwise, you can potentially earn up to 60% in daily profits here. Keep in mind that you need to fund your account first and make a deposit of $250.
Costs and Difficulty of Mining
Other important components of mining are the computing power of your computer system and the level of difficulty of mining. Today you need cutting edge equipment in order to mine and achieve any success. Also, the blockchain network has many users, and the system is programmed to increase the level of difficulty of mining based on the total computing power on the blockchain network.
So, new BTC enters the blockchain network at a slower rate, and you need a more powerful machine in order to mine. Moreover, miners need to solve computational puzzles to approve the block of transactions, but only the first one that is successful gets the reward. Besides, you need to keep in mind that the cost of electricity will probably increase if you mine on your own, and of course, this is a time-consuming activity.
In 2021, mining is not very profitable for individual miners, based on factors such as the initial costs, saturation of the blockchain network, and the value of the block reward. However, you can draw your own conclusion when you have a clear idea of your costs and the potential return on investment.
On the other hand, there are mining pools, which have several advantages like predictable payouts, shared resources, and reduced costs. But, you will need to pay a fee in order to join a mining pool. In conclusion, it is a very personal decision, and it’s good to do your research and have a good overview of the alternatives offered before you start mining.