Once again, this year Bitcoin’s network hashrate reached its maximum and this time we witnessed unusual activity. 

In blockchain grand design, hashrate measures the processing power of the Bitcoin network: the higher the hashrate is, the better the network is protected from a 51% attack. With a higher hashrate, you’re going to need more miners to mess with the security system.   

As hashrate depends a lot on market fluctuations, it makes sense to mine at a time when the Bitcoin price is high enough to cover expenses. So when the cryptocurrency price keeps going up and down, but the hashrate doesn’t follow and remains relatively stable, it can only mean one thing. The Bitcoin mining industry is maturing. 

Bitcoin Halving and its Possible Consequences

Although nobody’s sure what the next Bitcoin halving will do to the coin’s price, one thing is certain – Bitcoin and other cryptocurrency miners will indeed be affected. In May 2020 the new after-halving reward will amount to 6.25 Bitcoin instead of 12.5, and that’s a big change. 

When the miners’ reward falls by half, it is fair to expect that profitability will drop accordingly, at least for a while. Those who mine via ASICs will have to update their equipment or seek alternative solutions on how to increase their Bitcoin mining profitability. 

Chances are that after Bitcoin’s halving, inefficient miners will not be able to compete any longer and will be forced out of the market. Marco Streng, CEO of Genesis Mining, pointed out the possible post-halving consequences:

“It’s a very brutal event. Most inefficient miners will be wiped out. But it’s driving innovation.”

As for hardware innovation, the challenge is also getting tougher: although the technical capabilities and efficiency of mining hardware are obviously increasing, it can’t go on like this forever. Modern ASIC chips are already as good as they can be, considering the current state of technological progress. 

How To Mine at a Profit

The cryptocurrency mining market, however, continues to grow and the expected market value by 2020 is estimated at more than $11 billion. So who contributes to the impressive compound annual growth rate and how?

Before you start choosing your mining equipment, you need to decide which coin you’re going to mine. For example, with Ethereum you will only be able to use GPU-miners, and Bitcoin (and its forks) require more powerful ASIC-miners that are not suitable to install at home. The easiest way to count possible profitability is to use a mining calculator. 

Stay away from Bitcoin cloud mining. The majority of platforms offering these questionable services often turn out to scam their users!

As you’ve probably heard before, individual Bitcoin mining is a no-go as you’ll have to compete with huge mining farms and it’s just not a fair game. That’s why miners group together and form mining pools, where they combine their power and share the reward between the members in proportion to their contribution. 

Blockchain.com

But right now joining a mining pool won’t guarantee you’ll profit either, as only a few pools remain efficient. On top of that, some pools take advantage of their users by hiding the real numbers and understating the computing power they’ve contributed. This means that if you want to receive your rewards in full, you have to choose your pool carefully – compare the fees and do your general research. 

Another way to profit via Bitcoin mining is to optimize your business by using special software or firmware upgrade. Automatic switching between overclocking or energy-saving modes, online equipment monitoring, data-center management, and many other useful features can contribute to upgrading the mining process and securing a higher income.  

And then there are the electricity costs you have to count. As of today, profitable Bitcoin mining starts when energy costs are around $0.05 per kW/hour. However, if you seek to get a return on your investments you’ll have stick to the $0.03 kW/hour price. 

Conclusion

The blockchain mining market has matured and overly hyped events, such as the upcoming Bitcoin halving, probably won’t make much of a difference. Surprisingly, cryptocurrency price fluctuations have a lesser impact on the mining space these days. 

Also, as technology progress can no longer influence the course of Bitcoin mining as much as it used to, modern-day miners should focus on the price of electricity and software that they use to improve their performance. 

In some cases (for instance, high energy costs), it is more reasonable and profitable to buy Bitcoin rather than mine it, and that is when Lumi Wallet may come in handy.

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