In the past,
one of the easiest ways to make money was to mine Bitcoin (BTC). You simply connect your computer and let it start solving difficult math problems on the BTC ledger, which rewards you with Bitcoin (BTC). Now, after several years of existence, the process is no longer as easy as it was.
Since many discovered how they could make free money from Bitcoin mining, the rivalry to solve these mathematical problems on the ledger has increased. This has resulted in an increase in the complexity of the problem. It has also made the free money not so free anymore.
The competition is now so strong that
miners that plug in their computers at home just to make quick money are now losing money. This was revealed in a data from a data analytics and blockchain company – Diar. According to the data from the firm, institutional mining firms have increased considerably over the years. They have also squeezed the margins of retail Bitcoin miners.
According to Diar, the total amount of revenue generated from Bitcoin mining in the first half of this year exceeds last year’s earnings. At the moment, revenues generated this year have surpassed that of 2017 by over $1.4 billion. However, August’s ending hash rate
saw miners paying for retail electricity prices move to unprofitability. This happened for the first time in September.
The hash rate is the amount of computing power needed for a BTC transaction confirmation. The hash rates started getting higher as the competition increases. In turn, this significantly increased electricity bills and some miners even packed up their mining equipment.
The research carried out by Diar reveals that the cost of Bitcoin mining has reached new levels. It has gotten to the levels where
only institutional firms can pay for the gigantic electricity bills. Retail investors can no longer keep up the trend, as they no longer make profits. Rather, they are losing money, as they tend to
spend more on electricity bills than they mine.
Connect With Us