August 6, 2020 -

Can you make money mining bitcoin?

Can you make money mining bitcoin?

A very popular statement is that cryptocurrency isn’t an asset that can help you earn money. They say that cryptocurrency mining was profitable earlier, but now it is associated with losses. The cost of electricity grows and so does the difficulty of mining. That’s why a lot of miners stop doing this.

Profitability of mining in 2020

The era of home mining is now a thing of the past. However, thanks to the transition of Ethereum to the PoS-algorithm, we can mine this cryptocurrency. However, a lot of people ask if they can earn some money doing it. Today, it is harder to become rich with Bitcoin because the reward for the block has decreased two times. That’s why mining is profitable only if BTC costs more than 16 thousand dollars. Unfortunately, the chances of this are very low.

Can you make money mining bitcoin?

However, despite all the difficulties, the mining market is alive and can bring money.

How did the mining market change recently?

The year of 2018 was hard for miners. Chinese government forbade mining, and this industry was prohibited in South Korea. The biggest manufacturers of mining equipment – Bitfury, AMD, Nvidia, Genesis and others said that the demand for mining equipment decreased and the number of pools and companies also dropped.

In 2019, the situation improved. Bitcoin and the market increased, new generations of energy-efficient devices appeared. Among constraints, there are high transaction costs, which lead to low profitability.

Decreasing cost of cryptocurrency, increasing payback period and lack of any government regulation of this sphere, including a need to convert cryptocurrency to fiat money, are the main problems that exist now.

At that time, since the middle of the previous year, the biggest mining company Bitmain had to face a lot of difficulties. It almost went broke, there were big debts, and the computing power decreased. Among other things, there was a conflict between the founders. Simultaneously, main competitors increased the sales and main pools, such as Bitmain,, and Antpool, lost first place to Poolin and F2Pool.

Now, Bitmain tries to change this situation. The hashrate of this company is about 930 PH/s (1% of the total hashrate). In October, it finished building a big mining center in Texas and announced new ASIC miners with higher effectiveness. Moreover, in December, Bitmain changed the sales strategy. It took a significant part of the miners’ risks. They can buy the equipment on a credit or rent it. Also, big customers could buy put-options. Clients can sell coins at a determined price if the cost of a certain coin falls to a level that makes mining unprofitable. It decreased the fear of Bitcoin volatility.

However, in one year, China allowed mining. This was good news because 65% of Bitcoin mining is concentrated in China. This is the greatest number during all this time.

Cryptocurrency prospects

In the upcoming years, the market expects a race of technologies. Manufacturers try to find a method to increase the hashrate with lower electricity consumption. An increase in the number of new products is going to make the market grow. As Technavio calculates, the market volume of mining equipment is going to grow by 27 billion dollars and demonstrate an average growth of more than 23% by 2023.

One of the drivers of the mining market is the increasing demand for special equipment, such as ASIC and FPGA. Mining pools become stronger and stronger. Some cryptocurrencies need low computing power and can be mined on a smartphone, such as Dash or Litecoin.

With an existing hashrate, an average Bitcoin miner can mine without any losses is on the $8,000 level. Therefore, if Bitcoin costs more, this is profitable for miners even if you are a private miner.

Can you make money mining bitcoin?

This screenshot shows the cost of mining one Bitcoin based on the average electricity rate per country. According to the MarketWatch research, the cost of mining one Bitcoin varies from $531 to $26,170. That’s why the question of profitability depends on the country where you live.

Profitability after Bitcoin halving

Once every four years, the reward for mining increases two times and new coins are created two times slower. This is called halving, and this event was expected among all cryptocurrency traders because, after previous halvings, Bitcoin grew ten times. Unfortunately, this time, a miracle hasn’t occurred. Bitcoin stayed as valuable as previously. However, some experts think that the Bitcoin price increase will be slower and the price will set a new historical maximum in 2021. We can’t say what this maximum will be, we can only guess. However, we can buy Bitcoin. This event made this cryptocurrency more volatile, which is beneficial for short-term traders.

If we talk about the profitability of mining, it is significantly lower. Therefore, you need a price of about 16 thousand dollars to get very little income.

Is smartphone mining profitable?

In general, now mining is not such a profitable process for private miners. However, there are a lot of people who believe in the easiness of this kind of income. There are a lot of applications that allow to mine cryptocurrencies. However, you should understand that smartphones are not so powerful. That’s why you are not able to mine Bitcoins.

However, if you mine other cryptocurrencies, the income can increase. However, don’t forget about the price of young coins. It isn’t high enough to provide more or less normal income.

Also, a lot of scammers want your money. Some applications mine tokens even if you don’t have an internet connection. It is unrealistic, and this fact points to fakes, not real mining.

Don’t forget about the fact that mining is done only in cryptocurrencies with a Proof-of-Work consensus algorithm, which is considered too old. Most modern cryptocurrencies don’t support mining.

Don’t forget about electricity and faster wear of smartphones. A lot of people don’t want to mine at all because they can make a better profit via trading. It is easy to earn 10 dollars per 1000 dollars of deposit a day. An average person can’t mine this income. For example, with the Miner Gate Dash application, you can earn 2 dollars in 2 years. This is obviously nothing. If we increase the hashrate, you can earn 1 dollar in 1 week of unstoppable mining. As you understand, there is more likelihood to break the smartphone than earn some money with such an approach.

Don’t forget about the fact that the price of a powerful GPU is often similar to the price of a smartphone. Yet, even this method is not so profitable due to the high tariffs of electricity and a long period of payback.

Mining alternatives

The only method to get a more or less normal income is to create a mining pool. This is a very expensive venture and the cost of this business grows. Mining isn’t the only method to earn money with cryptocurrency. There are a lot of attractive methods:

  1. Trading. This is a process of buying at a lower price and selling at a higher. You get a profit from an increase in cryptocurrency price. You can do it on special exchanges. There are two more risky methods of getting an income with cryptocurrency – Forex and binary options. The first allows to trade CFDs, which are not a real cryptocurrency, but have a similar price. Binary options is a financial instrument that can help earn cryptocurrency on guessing the price.
  2. Developing dApps. This is a very hard and profitable method. You can develop decentralized applications and get good money.
  3. ICO. This is an investment into the new and promising cryptocurrencies.

To sum up, mining is outdated. There are many other more effective methods to get income with cryptocurrency. One can earn more or less normal income only by joining a mining pool.