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

By Jon Martindale March 5, 2019

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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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What is Bitcoin mining?

what is bitcoin mining

Bitcoin mining is far removed from the average Bitcoin owner these days, but that doesn't change how important it is. It's the process that helps the cryptocurrency function as intended and what continues to introduce new Bitcoins to digital wallets all over the world.

Collecting cryptocurrency can be boiled down to a simple premise: "Miners," as they are known, purchase powerful computing chips designed for the process and use them to run specifically crafted software day and night. That software forces the system to complete complicated calculations -- imagine them digging through layers of digital rock. If all goes to plan, the miners are rewarded with some Bitcoin at the end of their toils.
Why do we need mining?
Bitcoin works differently from traditional currencies. Where dollars, pounds, and euros, for instance, are handled by banks and financial institutions that collectively confirm when transactions occur, Bitcoin operates on the basis of a public ledger system. In order for transactions to be confirmed -- to avoid the same Bitcoin from being spent twice, for example -- a number of Bitcoin nodes, operated by miners around the world, need to give it their seal of approval.

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Bitcoin has a massive carbon footprint. This clever new cryptocurrency doesn’t

A broken Bitcoin over a grey background.

Bitcoin is undoubtedly exciting, but, as much as it might promise to solve some of the problems associated with global finance, it’s also responsible for creating problems of its own. The most concerning of these is the environmental impact of mining cryptocurrency due to the huge amounts of electricity it requires. This, in turn, results in tens of millions of metric tons worth of carbon dioxide being pumped into the atmosphere.

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