The last few years have seen dramatic growth in the world of cryptocurrency, with new platforms and currencies appearing all the time. Despite changing trends and newcomers in the market, the originator, Bitcoin, remains the most valuable decentralized cryptocurrency by far. But as its value grows, does the same apply to the process of obtaining it? Is Bitcoin mining profitable these days?
Yes, mining Bitcoin is profitable in 2021, but there are barriers to access. It requires technical knowledge that often discourages new miners from attempting to build their own Bitcoin mining PC. Even so, mining continues to grow in scale and efficiency, which means there are new ways to earn Bitcoin such as yield farming, which leverages existing crypto assets to generate a return.
We’ve put together an update on the state of Bitcoin profitability, cryptocurrency, and blockchain industry trends to help you get started. We’ll also provide some tips on how to make money with cryptocurrency and what it takes to build a PC mining rig.
A short history of Bitcoin
Launched in 2009 by “Satoshi Nakamoto,” whose identity remains unknown, Bitcoin was the first cryptocurrency to scale. In the years since, it has risen to prominence through high-security blockchain technology to provide an open-source alternative to institutional currencies, like U.S. dollars and British pounds, which are backed by banks or governments. Bitcoin has maintained its status as the dominant cryptocurrency in spite of other cryptocurrency entries into the market.
The years 2018 and 2019 were slower – this was the so-called “crypto winter” – but the industry saw major gains in 2020 and 2021. For instance, a bull market through the end of 2020 led to a first-ever global cryptocurrency valuation of $1,000,000,000,000 in early January 2021 – yes, that’s $1 trillion.
What are the major factors driving Bitcoin’s growth?
Bitcoin, and the overall world of cryptocurrency, is operating on a stronger foundation than ever. Longtime investors and miners who followed early cryptocurrency trends and held onto their assets have reaped huge rewards many times over. Here we’ll discuss the 3 main factors driving Bitcoin’s recent and long-term growth.
1. Public awareness and acceptance
As the first cryptocurrency to hit the market, Bitcoin wasn’t embraced or even well-known in its early stages. But as the years pass, the rise in public awareness is pushing Bitcoin’s growth. This includes acceptance from both individual bitcoin miners and investors, as well as larger financial entities.
As Forbes reports, even major financial institutions are starting to engage with Bitcoin, as demonstrated by a massive rise in CME contracts for Bitcoin futures. According to Forbes, this “kind of growth is more than three times the heady 425% increase in Bitcoin’s price over the last year and a further representation of the unprecedented level of demand for exposure to the asset class among institutional investors.”
It looks like this trend will only continue, with Morgan Stanley recently becoming the first major bank to allow wealthy clients the ability to invest in bitcoin funds. That’s only a few days after Bitcoin broke a new record valuation of $60,000 per unit.
2. Limited supply of Bitcoin
Bitcoin and (certain other cryptocurrencies) ostensibly exist in a finite supply. So, as time passes and more people accumulate cryptocurrencies, miners are hunting for an increasingly small number of bitcoins. To facilitate growth and reduce inflation, most cryptocurrencies periodically go through what’s called a “halving” process.
In essence, this doubles the number of remaining bitcoins left to mine, but it also reduces the value of each bitcoin. For example, after a halving event – they occur about every 4 years – anyone with 2 bitcoin in their bitcoin wallet would have 4. In more technical terms, halving takes place whenever 210,000 blocks are created. Given that there is a limited number of bitcoin, however, there will only ever be 32 halvings ever. You can see a countdown to the next halving here.
3. Processing power and profitability
The biggest associated Bitcoin mining cost is the energy you consume in the process, whether it’s with a single rig or as part of a larger crypto farm. The industry’s overall energy impact has traditionally been an easy way to gauge growth, and The Guardian reported that it had become equivalent to the annual carbon footprint of Argentina. Their data is sourced from the Cambridge Bitcoin Electricity Consumption Index, where you can find up-to-the-minute information about the energy impact associated with mining.