Cryptocurrency mining is a process by which transactions are verified and added to the blockchain, and new Bitcoins are generated and given to miners as a reward. Apart from the coins minted through the genesis block or Block 0 (the very first block created by Satoshi Nakamoto founder of Bitcoin), today all Bitcoins in circulation came into being because of mining.
In 2009, reward for mining one block of Bitcoin was 50 Bitcoin which was halved to 25 Bitcoin in 2012. In 2016, it was halved to current level of 12.5 Bitcoin per block. It is expected that by 2020, the reward level may further halved to 6.25 Bitcoins.
Hashrate, an Important Term
Hashrate is the measure of a miner's computational power. The higher their Hashrate, the more solutions (and hence, block rewards) a miner is likely to find.
How much miners earn for mining one block of Bitcoin?
As of writing this article, price of Bitcoin is 11,391.98 USD, so miners who successfully mine one block of Bitcoin are getting 142399.37 USD per block (12.5 x 11391.98). This reward for successfully completing 1 block is halving after every 210,000 or an average of every 4 years. But this big treat is no more cheap, you have to pay huge price and efforts to earn this.
Is mining possible on my PC?
Mining cryptocurrency like Bitcoin or Ethereum on your PC will give you zero profit in 2019. Mining on PC was possible in the early days up until 2010, there were individuals who mined 200 Bitcoins on their Pentium 4.
Laszlo Hanyecz, an early miner accumulated so many Bitcoins that he bought two pizzas by exchanging 10,000 Bitcoins.
ASIC Mining Hardware
First increase in difficulty of Bitcoin mining was reported on Dec 30, 2009 (06:11:04 GMT) and today Bitcoin difficulty stand at 9,985,348,008,059.60.
With current difficulty level you need ASIC chipsets engineered explicitly for Bitcoin mining to do a profitable Bitcoin mining. Main reason was that over the years the difficulty on Bitcoins network has grown so significant that it would be almost virtually impossible to have any success solving blocks successfully with anything other than an ASIC Antminers.
Top Bitcoin miners on the market today include Antminer S17 Pro, EBIT E12+ and Terminator T3 with Hashrate of 62 TH/s, 50 TH/s and 43 TH/s.
How much you can earn with your ASIC miner depends on its purchase price, its Hashrate and amount of electricity it consumes. Just to have an idea, with ASIC miner of Hashrate 50 TH/s you can make profit of 8.96 $ per day (price of Bitcoin is 10,040.68 $).
If you are mining enthusiastic and can't afford expensive hardware and electricity bills there is way around for you in the form of mining pools.
Mining Pools are group of cryptocurrency miners who bring together their computational resources through internet and on successful output of cryptocurrency mining, the reward is shared among the miners based on the agreed terms and contributions to the mining activity through production of valid proof of work.
Majority of mining pools are located in China and it is estimated that Chinese pools control approx 81% of the network hash rate. Following image represents an estimation of Hashrate distribution amongst the largest mining pools.
Is pool mining profitable? The answer is "it depends on a lot of factors". These factors are Hashrate of your mining equipment, pool fee, electricity cost.
Regulations and Crypto Mining.
The consumption of electricity for bitcoin mining is huge. Bitcoin mining now consumes more electricity than 173 countries. Which mean that if Bitcoin mining is an activity it would be the 47th largest consumer on earth (slightly less than Kuwait but more than Greece).
Iranians officials seized roughly 1,000 Bitcoin mining machines from two former factories in June this year. The move was taken following a spike in electricity consumption. Demand for power rose by 7% in June and cryptocurrency mining was thought to be the main cause. Earlier this month, Iran officially recognized cryptocurrency mining as an industry.
Canada is a crypto mining friendly country with mining operators able to apply for favorable electricity rates.
Crypto mining remains unregulated in most of countries but it is expected that governments will show strict regulations if crypto mining continuous to consume more power.