Bitcoin mining profits are on the rise. But don’t buy your own hardware just yet

By Jon Martindale March 5, 2019

Lars Hagberg/Getty Images

Bitcoin mining isn’t anywhere near the money-making machine it was just over a year ago, but thanks to some larger players bowing out as profits fell, they have now begun to rise once again. Gross margins — the difference between earnings and the total cost of investment — rose to 39 percent in February, the first time it’s risen at all in well over a year.

It’s been a long time since mining Bitcoin yourself was a simple and profitable venture (although there are ways to do it). While the early days of the cryptocurrency saw people mine hundreds or thousands of Bitcoin with home computers, today if you aren’t investing hundreds of thousands in the latest hardware and have a plentiful supply of cheap electricity, you’re going nowhere fast. As The Next Web suggests, the adoption of new, more efficient technology is likely to be the driving force of Bitcoin’s mining resurgence, by forcing out older, less efficient hardware, as well as a relative stabilizing of the value of individual Bitcoins.

Despite Bitcoin’s value peaking in December 2017 (and falling dramatically since then) the hash rate, or the amount of computing power that’s attempting to mine the cryptocurrency, has risen more than threefold since. As profits from mining Bitcoin fell to low double digits in late 2018, the hash rate did fall by around a third. Over the past couple of months, however, it has begun to grow once again and mining profits for those still in the game have risen in kind, increasing seven percent throughout February.

This doesn’t guarantee that Bitcoin’s value won’t fluctuate massively in the weeks or months to come, as cryptocurrencies tend to do. But miner confidence appears to have returned in force, with the hash rate rising by more than 20 percent since the start of the year.

Even if Bitcoin’s value is far from certain, it is performing fantastically as a transactional currency. After a big drop off in early 2018, Bitcoin trades have only increased, reaching more than 350,000 transactions a day in early March.

Still wondering how “mining” relates to cryptocurrencies like Bitcoin? Our guide to Bitcoin mining has you covered.

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The IRS is cracking down on people who didn’t pay taxes on Bitcoin earnings

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If you've been trading Bitcoin and haven't been reporting your earnings to the IRS, you might be getting a surprise in your mailbox.
The IRS is cracking down on cryptocurrency traders who didn’t report their earnings on their taxes. By the end of next month, around 10,000 people are expected to get letters from the IRS asking them to pay back taxes on unreported earnings from cryptocurrency trading, Engadget reports.
Last year the IRS launched a “Virtual Currency Compliance campaign” to address noncompliance related to the use of virtual currency.
“U.S. persons are subject to tax on worldwide income from all sources including transactions involving virtual currency. IRS Notice 2014-21 states that virtual currency is property for federal tax purposes and provides information on the U.S. federal tax implications of convertible virtual currency transactions,” reads the announcement. “The Virtual Currency Compliance campaign will address noncompliance related to the use of virtual currency through multiple treatment streams including outreach and examinations. The compliance activities will follow the general tax principles applicable to all transactions in property, as outlined in Notice 2014-21. The IRS will continue to consider and solicit taxpayer and practitioner feedback in education efforts, future guidance, and development of Practice Units. Taxpayers with unreported virtual currency transactions are urged to correct their returns as soon as practical. The IRS is not contemplating a voluntary disclosure program specifically to address tax non-compliance involving virtual currency.”
Last week the IRS started sending “educational letters” to some taxpayers. The names of those who are receiving the letter were acquired from “various ongoing compliance efforts” conducted by the IRS.
"Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest, and penalties," said IRS Commissioner Chuck Rettig. "The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
Taxpayers that do not accurately report their earnings through cryptocurrency trading are liable for the tax for those earnings as well as penalties and interest. In some cases, the IRS notes that those who have not paid taxes on cryptocurrency earnings could potentially face criminal prosecution.

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Don’t ditch gasoline just yet: BMW argues electric cars are overhyped

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BMW is spending millions of dollars developing electric cars that motorists don't want to buy, according to the head of its research and development. The German company needs to add battery-powered cars to its portfolio to comply with the draconian emissions regulations coming into effect soon in the early 2020s in key markets, including Europe, but it doesn't expect electric cars will outsell gasoline-powered models anytime soon.

"There is no customer request for battery-electric vehicles. There are regulator requests for battery-electric vehicles," explained Klaus Frölich, the man who oversees BMW's research efforts, in an interview with Australian website Motoring.

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Facebook is getting into the cryptocurrency market. It announced a digital wallet called Calibra on Tuesday, which it plans to launch in 2020.

The company wants to be the one to bring the reported 1.7 billion "unbanked" adults into the world of financial services under its umbrella. But the company's solution isn't another Bitcoin -- far from it. Libra, as the currency is known, is designed to allow Facebook users to make purchases on the social network and on other websites online.