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Bitcoin mining is moving on to large-scale operations but there are strategies for individuals to earn money still.
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The days of mining Bitcoin in your bedroom on a desktop computer are gradually becoming a thing of the past. It used to be that a small network of staunch Bitcoin supporters would mine the cryptocurrency on individual systems, more as a hobby than anything else. But as time goes by, the network grows more and more large and competitive, and mining becomes a challenge for smaller players.
At the end of 2009, the total hashrate of the Bitcoin network was 8 million hashes per second. By the end of 2010, it had grown to 116,000 million hashes per second. During 2014 the network surpassed 10,000,000,000 million hashes per second. These immense numbers mean that it is close to impossible for a regular Joe to set up a really profitable operation at home and make a living off mining Bitcoin.
Small-scale mining challenging
Powerful hardware costs a lot of money, and that is just the first challenge when starting an operation. Even for an entry-level machine that will be able to cope with the complex calculations, you can expect to fork out a few thousand dollars (including cooling systems).
However, the likelihood of success with an entry level machine is slim at best. Most serious miners spend tens of thousands of dollars on strong hardware that can compete with other miners on the network. In fact, bitcoins are now mined almost exclusively in mining pools, with huge data centers running the latest mining hardware. This state of the art hardware is extremely power-hungry, and electricity bills escalate into the thousands.
Big mining pools take the electricity factor so seriously that they do one of two things: either move to operations where electricity is cheap, like China, or to colder countries, such as Iceland, were powerful data centers become more energy efficient.
Between high entry cost, the necessity to competitively manage the overhead and the ever-improving new equipment entering the market on a regular basis, the profit margins grow extremely thin. So thin, in fact, that using the economies of scale is almost the only way to make a profit, which ultimately prices small-scale participants out of the market, basically turning Bitcoin mining into just a hobby for them.
Mining isn’t the only option
If you are absolutely set on mining, a good strategy is to mine altcoins, which have lower barriers to entry but a relatively good value against Bitcoin. Your mining efforts are likely to be more profitable, and once the specific token goes up in value you can trade it for Bitcoins. You can also directly invest in altcoins, without mining, and do the same. Wait for the price to go up and then trade it for Bitcoins. The money you save on mining equipment can be spent on additional tokens.
Another strategy is to hold or stake a token. There are a number of coins on the market that will actually compensate you for holding onto a coin for a period of time. Similar to getting paid dividends, token holders will get paid for helping to preserve the security of the network through Proof of Stake mechanisms. This will increase your holding of a specific coin over a shorter period of time, giving you the opportunity to trade against Bitcoin in the short-term.
The value of Bitcoin is close to its all-time high at the moment and investing directly in the cryptocurrency can be risky and costly. An indirect investment route through altcoins with better growth potential can mitigate both the cost and the risk.
Easy to achieve on one platform
BitConnect is a self-regulated, decentralized financial system based on Blockchain technology that provides potentially profitable Bitcoin solutions through multiple investment opportunities.
They offer BitConnect Lending, which allows users to invest or lend Bitcoins through the BitConnect coin (BCC). Investors will profit from the BitConnect Trading Bot and Volatility Software, paying out daily interest earnings.
High adoption rate
The platform has a large offline communities, providing education on digital tokens all over the world, including the BitConnect Annual Ceremony Event.
In a first for the crypto community, they released a music video album to raise awareness of the potential benefits and opportunities cryptocurrencies afford investors and users. BitConnect has also seen a high adoption rate among cryptocurrency enthusiasts, with one of the highest mining hash rates for Scrypt cryptocurrencies.
