Mining Bitcoin is an efficient way to enter the crypto market, ride the wave of volatility, and make consistent income. After Bitcoin was released and started to gain popularity, mining became increasingly challenging because users had to constantly update their hardware capabilities to sustain network congestion and new blockchain requirements. Now, if you want to start mining, you need expensive hardware that will consume significant electricity.
The transaction methods also changed since now you can buy Bitcoin online with credit cards, bank deposits and even P2P trading. But even if trading Bitcoin is more efficient than before, leveraging mining can be quite tricky, and it’s expected to be more of a hassle after the fourth halving in April 2024, when the block reward will reach 3.125 BTC.
So, should you expect Bitcoin mining to be less lucrative in 2024 or even more profitable than before? Let’s find out.
What’s the impact of halving for Bitcoin?
BTC halving occurs approximately every four years, and its purpose is to cut back the number of new coins released on the network to lower supply and increase demand. Therefore, the BTC price is expected to increase after the halving, a trend noticed by users in the past years. However, you can never accurately forecast the price during the period because other factors, such as worldwide crises, might interfere and alter it.
Regarding the impact felt by miners, Bitcoin halving usually decreases the incentivization for miners since the block reward is smaller. This means they must boost computational power and efforts to profit from mining since they won’t be able to cover the operation costs. Miners might shut down their rigs and focus on altcoin mining, which is less complex due to the low hash rate on the blockchain.
What will happen to Bitcoin in the end?
The total Bitcoin coin supply is 21 million, and until now, more than 19 million have been mined. This means we’re getting closer to the last Bitcoin to be mined somewhere around 2140, so we have a long way to go until Bitcoin ends. But what happens after that?
While there’s no certainty about the cryptocurrency’s further development, it’s sure that no more Bitcoins will be released, and miners will probably make profits from the transaction fees of regular users. It’s also impossible to tell how well incentivized that will be, but if crypto becomes settled as legal tender globally, this activity can bring considerable returns. That’s because users will have to pay a fee for the transaction to be operated, requiring a new block to be added to the blockchain that the miner does.
Will the network improve?
Although blockchain is revolutionary and decentralized networks are considerably safe and well-operating, they’re still human-made and, therefore, prone to hardware malfunctions and software glitches. When it comes to hardware, it’s common for the ASIC chips to get damaged or overhead due to continuous usage, day and night, required to yield consistent returns. Whether they’re not appropriately cooled or accumulate dust, these processors must be maintained constantly; otherwise, they have low efficiency and even shut down completely.
At the same time, miners are frequently working through firmware on mining pools that allow them to connect their rigs to a network along with others to receive better rewards at lower effort. These networks aren’t always reliable, creating problems with the mining speed or connectivity issues. Therefore, sometimes you must consider repairing the systems or changing them with new ones to leverage good results.
How environmentally safe is mining?
Bitcoin mining is regarded as one of the most damaging to the environment, as it contributes to 0.2% of global greenhouse gas emissions. At the same time, its energy consumption accounts for 0.4% of worldwide amounts, sometimes reaching the equivalent of yearly energy consumption for a country. Lastly, the hardware used can rarely be recycled, leading to more electronic waste.
As you can see, mining Bitcoin is increasingly affecting the environment in the middle of climate change issues, and improving it is rather difficult since Bitcoin still uses the PoW consensus mechanism. Therefore, there is a need for better regulation, hardware, and software solutions in regard to protecting the environment because even if crypto offers us financial freedom, it might worsen the life quality by affecting natural resources.
How much to contribute for better results?
Individual Bitcoin mining is not possible anymore due to the competitiveness of the ASIC processors. You’d need considerable pricey hardware and constantly updating it to be on top of the market. Of course, individual mining is only worth it if your benefits are more significant than the costs because you must handle the payments for power, time, and the cryptocurrency’s value.
However, there’s a safer way to make profits with Bitcoin mining, which includes entering a pool where miner groups share the rewards of their contribution to reduce mining difficulties. Indeed, the main disadvantage of entering pools is that the final reward decreases since it’s shared, but pools offer a better way to complete complex mathematical problems.
There are two standard pool methods for Bitcoin mining. First, the proportional mining technique provides the exact reward amount equivalent to the effort spent to deliver the solution. On the other hand, the pay-per-share approach provides rewards by the computational power of the pool. This method is most preferred during bearish periods because since the Bitcoin prices are low, providing rewards equivalent to involvement would be counterproductive. However, proportional pools are frequently preferred to ensure more safety and constant results.
What do you think about mining Bitcoin in 2024?
Bitcoin mining may be considerably tricky, but it’s also significantly rewarding in the long term. So, if you’re interested in mining and want to build up a stable portfolio, you could join a mining pool with less expensive equipment and leverage results in the future. Remember, mining will get more problematic as it reaches another halving, so the best time to start is now. Still, considering how much is left until the last Bitcoin is mined, you surely have enough time to succeed.
