Is It Really Worth Investing In Cryptocurrency Mining?
Is crypto mining really that easy, and is it right for you? There are a few vital things you must know before you decide to cryptocurrency mine. Such as:
1. Understanding the total investment costs
2. The functions of the hardware and the software associated with mining cryptocurrencies.
The profitability of mining cryptocurrency depends on the market conditions, your living environment, and the efficiency of the hardware and software involved. Cryptocurrency mining is a process that uses computer hardware and software to create cryptocurrency coins or tokens.
Mining is the process of verifying and adding transaction data to a blockchain by solving complex mathematical problems. Miners who verify and add blocks of data to the blockchain are rewarded with coins or tokens of the cryptocurrency they are mining. For example, miners who add a block of data to the Bitcoin blockchain are rewarded with 6.25 Bitcoin. BTC 6.25 is worth approximately $187,500 at the time of this writing. That’s 187,000 reasons why this opportunity should be explored.
Is it really worth investing in cryptocurrency mining?
Like physical mining, your chances of success increase when you mine in the right location. For crypto mining, this means finding an area where electricity is cheap or free.
Understanding what the energy costs are, is one of the most critical factors in the investment evaluation process. A moderately equipped cryptocurrency miner(computer), that is technologically competitive costs about US$5,000. These units can compute approximately 95 TH/s (trillion hashes per second) and require about 3,250 watts of electricity to function at peak performance. All you would be miners need to bear in mind that your fellow miners might have invested in equipment that costs ten times as much as yours and computes faster as well, giving them an edge in computing power.
If this equipment will operate for 24 hours a day, you will need to calculate the energy costs per hour, per day, and per month to determine the total costs. Electricity is usually billed in Kilowatts per hour(kWh) or Kilowatt hours. 1000 watts X 1 hour = 1 Kilowatt hour.
What is the price of 1 kilowatt-hour of electricity where you intend to run (operate) your cryptocurrency miner? If you operate your miner in Manhattan, New York the average cost of 1 kilowatt hour of electricity is about $0.2158 cents as of May 2022. The price for 1 kilowatt hour of electricity in Bhutan is about $0.036 cents per 1 kilowatt hour. Plugging these values into our formula we can calculate how much it costs to run this equipment for 1 hour.
3,250 watts = 3.25 kilowatts x 1 hour = 3.25 kilowatts/hour (kw/hr).
3.25 X 0.2158 = $0.70135 cents
So It costs $0.70135 cents to run a $5,000 competitive crypto miner for 1 hour in New York City. $16.8324 to run this miner for a day. $504.972 to run this miner 24 hours a day for a complete month. Please understand, I extended the amount of decimal places because that’s what utility companies do when they calculate your bill.
This same piece of equipment operating in Bhutan would cost (3.25 X $0.036 =) $0.117 to run for one hour, $2.808 for one day, and $84.24 for a 30-day month. $505 a month vs. $84 a month is a substantial difference. This evaluation is at the core of the crypto mining investment.
Chart courtesy of Yahoo
On average a cryptocurrency miner can generate somewhere around $12 or more daily, although that does not mean that you will be that fortunate if you take on this investment. There are a number of factors that can lower this possibility such as weather, equipment failures, and fierce competition just to name a few. If you choose to mine Bitcoin, I’ll repeat, the reward is 6.25 coins for solving the mathematical riddle. Bitcoin traded as high as $60,000 dollars in November of 2021. Many analysts have forecast the possibility of an even higher price for Bitcoin by the end of this year. This trend and forecast could make the potential for revenue well worth the investment in the equipment, if you can utilize electricity at an optimum rate of less than $12 a day.
One thing to take note of is, a $5,000 investment in cryptocurrency mining equipment plus the cost of electricity to run it, may potentially give you a better return than the 1%, mainstream banks give on $5,000 deposited in a traditional savings account in one year. Especially if you can mine for cryptos in the right area where electricity is cheap.
Since the ability to solve the mathematical riddle is completely random, anyone with the mining software and a computer has a chance to be successful at mining a Bitcoin, somewhat like buying a lottery ticket. Even if the odds are 1 in 50 million you have the potential to be that 1. Be advised there are a great many maybes, and fierce competition that come with this quest, it might be cheaper to just buy the crypto coin of your desire.
Read more about Cryptocurrency here
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