Bitcoin mining in 2020

In order to understand what mining is, let’s define the concept of Bitcoin.

First of all, Bitcoin is a cryptocurrency that is based on a blockchain. The blockchain has lists of all transfers for all time, just like an operator recording the income and expenses of a company’s finances. In 2020, the fact of our personal trust in this transaction repository is important. In our case, the network was written in code, and unlike company operators, we can only trust it. Given the fact that Bitcoin appeared in 2008, during the downturn of the financial crisis, its purpose was to make money without trust.

The nuance is that without having to trust the bank’s accountants, how can we make sure that people don’t cheat the network? How can we make sure that a single bitcoin can be spent only once? In 2020, a large number of computers around the world, called miners, are responsible for protecting the network. They check that the rules are followed when a transaction is sent on the Bitcoin blockchain and that the Bitcoin required to send it is available.

There are blocks into which transactions are combined, after which miners select a string of characters. Each block has such a string – it is called a “hash”. Each subsequent block contains a hash of the previous block and a hash of the current block, which is selected by miners. When the hash is correct, the block is added to the chain. This entire sequence of actions is called proof-of-work, and it is the most important security feature of a cryptocurrency like Bitcoin.

Some of the other miners connected to the network check the transactions already contained in the block for compliance with the transfer rules, for the presence of a hash of the previous block, and for the correctness of the current block’s line. This sequence of blocks is called a blockchain.

Payments per block and miner commissions

Each time a new block is added to the blockchain, the miner mines new bitcoins. They also receive payments from the transactions they process. All of this justifies the cost of electricity and computer hardware, especially when the Bitcoin rate is measured in thousands of dollars.

Mining bitcoin: three ways

Once you’re excited about bitcoin mining, you can move on to the part that brings you to this article – how to mine bitcoin. There are three options for mining:

Now let’s move on to a visual analysis of how to mine Bitcoin.

Mining pool

Mining bitcoin among a huge number of miners is a simple, reliable, and fast way to create a profitable cryptocurrency mining business. Basically, you are linking the resources of your hardware with the power of other miners to increase your chances of making a profit.

After registering in the pool, you and all its participants share the payments for the block you received together with the pool participants. This means that you will receive payments on a regular basis.

But there are also differences in pools. When choosing a pool, you should take into account their features. Such as:

• Pool size
• Minimum withdrawal amounts
• Pool commissions

Pool size

The size of the pool is one of the things that should be paid the most attention to, because with more miners in the pool, the chance of receiving payments is higher. However, because the number of bitcoin miners will be high, payments will be distributed among a large number of participants, which makes the payouts for cryptocurrency mining smaller.

Small miners often choose to join large pools involved in bitcoin mining. This is due to the fact that such a choice carries the possibility of receiving large payments and low electricity costs.

Minimum withdrawal amounts

There is one more important detail that you should pay attention to – the minimum amount that a pool can allow you to withdraw. Since you have recently started mining, the best solution is to join pools with a low withdrawal limit to get a clearer picture of how bitcoin mining works without spending large resources on cryptocurrency.

It’s not the most desirable situation for you in 2020 – when you spend a lot of time and electricity, while accumulating a decent amount of cryptocurrency, and you can’t withdraw it to pay off your electricity bills.

Pool commissions

Your pool organizes all this. And naturally, it charges a symbolic fee for this, which is charged as a percentage of your profit. It is “deducted” from the bitcoin that was mined automatically, so you don’t have to worry about the commission separately.

However, this factor affects personal income to a certain extent, so it is still worth considering in the mining process.

The average percentage of commission from cryptocurrency collection: 1% – 3%. Of course, there are fees of 0%, but you should think about the reliability of such a pool. A more reliable choice would be a proven pool. Launching a pool in 2020 is not a cheap pleasure. There are a lot of data centers and systems that need to be paid for. As well as the work of a staff of a certain number of employees. All this justifies a 1% to 2% commission. However, pools requiring more than 3% should probably be avoided.

Solo mining

For those interested in mining Bitcoins, it is theoretically possible to mine them solo. From the outside, solo mining looks like an ideal option, especially for a beginner. It seems that the advantages are enormous, at least that there is no need to share profits with thousands of other miners. At the most, even one hundredth of the payment for your work is quite expensive, which makes it possible to plan mining in the future.

To some extent, this is true.

However, since we mine cryptocurrency solo, we do not share in the profits of other miners. The reward belongs to the miner who has selected the right hash. The disadvantage of this method is the competition with all miners and pools on the planet. Will the power of your device allow you to do this? Of course not.

However, this practice does exist. The main requirement for solo mining is the availability of a mining farm and suitable conditions for it. So, let’s consider the option that you are a multimillionaire, organized your own mining farm and became a solo bitcoin miner. To do this, in 2020, you would need to purchase hundreds (or even thousands) of ASIC miners, each costing $1,000 to $1,500.

Difficulties ofsolominers

As mentioned above, in addition to having a mining farm, you need to create conditions for its operation. The first thing they include is the ability to consume a lot of electricity. An example of the best cryptocurrency mining device for 2020 is the antminer s19. The average power consumption is 3200-3600 watts. Multiplying this figure by the number of such devices on your farm, we get astronomical monthly electricity bills.

If we take this fact into account, another nuance immediately arises. Consuming electricity in such large quantities leads to a lot of heat generation. When you work with a laptop for a long time, holding it on your lap, sooner or later you will feel the heat, right? Considering that a laptop uses 70 watts on average, imagine that an antminer consumes about 51 times as much power. And your farm consists of 100 to 1000 such devices in a small room. In this case, you will need ventilation, which will further increase the electricity consumption for bitcoin mining.

In 2020, the installation of a ventilation system, and the equipment itself, is not cheap, and it also creates a lot of noise. The sound from so many miners and industrial-scale ventilation will cause concern among neighbors. The practice of lone miners has revealed a certain pattern. They all establish their farms mainly in cold climates, saving on ventilation. They also use cheap electricity to save on it, thereby increasing their profits. And they use remote areas with a small population, where no one is bothered by noise. In today’s realities, the places where cryptocurrency mining is flourishing are: rural Canada, Russia, and Iceland.

Cloud mining

You may be wondering why miners are investing large sums of money in 2020 to buy expensive bitcoin mining equipment when they could rent it out and earn other profits? There is a reason, and it is simple. They want a guaranteed return on their investment and to avoid price spikes.

Now let’s move on to consider the pros and cons of cloud mining.

Advantages of cloud mining

1. You are not responsible for the hardware. You do not need to replace or repair the equipment. (But we advise you to be careful when reading contracts with companies that provide cloud mining services, as they may require compensation for damage to bitcoin mining equipment)

2. In addition, you have the opportunity to earn money from mining without investing huge amounts of money in equipment. This means that you are completely free from the noise of the equipment and the high temperatures in the room from it.

3. The last advantage is that you do not need any knowledge of bitcoin mining. If you want to engage in cloud mining, you basically don’t need to have any knowledge of cryptocurrency mining.

Cons of cloud mining

1. The first disadvantage is the prepayment. There is a possibility that the price of bitcoin may fall. This means that mining will be unprofitable until cryptocurrency prices rise again (if it does, of course). In this case, you are taking a risk, as cloud mining operators need revenue.

2. You lose the ability to change and update the mining software used by cloud mining providers.

3 The third disadvantage is that cloud mining can become a target for hackers. Genesis Mining was attacked in the summer of 2017, and the bitcoins in the organization’s wallet were taken out of the hot – to an external one.
Independent opinion: If you want to own any cryptocurrency in 2020, but you are not able or willing to invest in expensive bitcoin mining equipment, you have the opportunity to buy bitcoins with the money you could invest in cloud mining. In this case, if the bitcoin market goes down, you have everything you need to sell your position.

Mining Bitcoin in a pool

After all, you are interested in learning how to mine cryptocurrency, right? There are things you should pay attention to before you start mining.

1.You need to have at least one ASIC

2. Mining software

3. The wallet where you store the cryptocurrency

4. equipment for cooling

5. electrical distributor

6. 6. A device that controls consumption

7. wired Internet

8. a device with Internet access (PC, phone)

Bitcoin mining in a pool. Setting up the equipment.

Depending on the model of the ASIC miner, the configuration of specific parameters may differ. The model should come with a manual with a detailed description of how to set up the equipment. In 2020, it can also be found on the manufacturer’s website. This article will show an approximate sequence of setting up an ASIC for bitcoin mining.

1. You need to know the power of the ASIC you will use. It is indicated in the manual.
2. You need to configure the power supplies based on the power consumption. If you have 3 power supplies with a power of 1000 W and 1 with a power of 650 W, this will be enough for you to perform a large number of cryptocurrency mining operations with one miner.
3. Use the appropriate connections to connect the ASICs to the power supplies.
4. Once you have connected the power supply to the ASIC, you need to insert an Ethernet cable and connect it to the Internet router that you will use to mine bitcoins in the pool.
5. Once connected, you can turn on the power to turn on the ASIC.
6. Now you should scan the IP using a scanning tool on your mobile device or PC so that you can see all the devices that are connected to this internet connection. You will find your ASIC in the list. After that, we enter the IP address of our ASIC in the browser window on the device we have chosen.
7. In the image, you can see the login window of the miner system. Most often, by default, this Antminer S9 device has the following login information: Login – root, password – root. You can change them in the Admin tab, which I recommend doing.

8. Next, you should enter the data of the mining pool you are using, which can be obtained from the website of this mining pool.

9. As soon as the login takes place, your ASIC should start mining bitcoin in the pool.

Choosing a mining pool

In 2020, you have the option to choose any mining pool you want. But we recommend choosing one of the suggested ways for a mining pool to get started:

Method of calculating potential profit

Each of the mining pools has its own personal user interface. But the idea will be the same. You will need to go to the website of your personal pool to enter the public wallet address when such a request appears.

You must enter the public address of your wallet in the search bar. This will give you the opportunity to monitor your Bitcoin mining information. There are also some pools that allow you to set a limit for automatic withdrawals.

Calculation of potential profit

Since you will want to know how much you are obliged to earn, you have the option of using a cryptocurrency mining calculator. The simplest set of tools for this is CryptoCompare.

Calculating income on a calculator

If you want to check how much you should earn from mining bitcoin, you can use a mining calculator. CryptoCompare provides an easy-to-use tool.

1. We open our mining software and check how many mega-hashes per second it will give us:
2. Download a profitable mining calculator
3. Enter the hashing power at the moment
4. Enter the amount of energy consumed by our devices (or a device)
5. Enter the cost of electricity in kWh.
6. Enter the pool commission.

Below is an example of how we use a DragonMint T1 miner to mine cryptocurrency in a Slush pool. Let’s take a look at the approximate cost of electricity using the average cost in the UK as an example. This way, you will definitely want to find a lower electricity bill in your area.

As we may have noticed, mining Bitcoin in the UK is not particularly profitable. In 2020, the high cost of paying for electricity bills could mean that you could have a loss of $3 or more every day, even with a highly efficient miner. When calculating the price of the equipment, Bitcoin mining itself may not pay for itself.

You’ve probably thought about how long it will take for your investment to pay off. Payback is directly related to your equipment. Even with such an advanced tool, it can take more than three years. And this is without taking into account the complexity of mining. As more and more miners start working in the network, the complexity increases, which directly affects Bitcoin mining. This means that the more miners there are, the less cryptocurrency can be obtained.

An alternative to Bitcoin in cryptocurrency mining

Some cryptocurrencies are still mined using CPUs or GPUs. The most popular options for 2020: Altcoins, Ethereum, Ripple, Dash (anonymous cryptocurrency), etc… And you can also find a large number of controversial projects on the Internet that are mined with less expensive Bitcoin mining hardware.

That’s all for now. I think the article was informative and useful for you. Now you have knowledge about cryptocurrency mining. Starting with the reasons that draw us into the mining process, ending with the installation procedure and analyzing such issues as the payback period.