Bitcoin mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions. In the early days of Bitcoin, mining was performed by individual computers running the Bitcoin nodes as they compete to solve algorithmic problems while confirming transactions on the Bitcoin Blockchain.
The fastest computer to solve a particular problem is rewarded with a specific amount of Bitcoin, and that is how new coins are introduced into the ecosystem, hence the term “Bitcoin Mining.”
Increasing difficulty As time passed, “Bitcoin halving” factors in, technology improves and more efficient mining equipment developed. This gave rise to increased mining difficulty as the rate of competition skyrocketed.
Instead of having millions of individual computers independently mining Bitcoins across the globe as is assumed to have been the original intention of Bitcoin’s creator, Satoshi Nakamoto, what is obtainable nowadays is the installation of massive mining farms.
A Bitcoin mining farm is usually comprised of a huge number of processors, known as mining pools. These pools are interconnected to compete as a single unit in the transaction processing competition on the Bitcoin Blockchain. This, in essence, automatically makes it extremely difficult for small independent miners to carry out mining profitably.
Return on investment (ROI) One major factor that determines the viability of Bitcoin mining is the return on investment (ROI).
Jure Pirc sees Bitcoin mining in 2017 as a very challenging adventure. He notes that every person or company that decides to invest in Bitcoin mining must understand that the current ROI time for the most efficient miner on the market “Antminer T9” is between 9-11 months. However, ROI time varies with energy and cooling costs. Therefore, countries with affordable electricity and a cooler climate hold a big advantage when it comes to mining profitability.
Network difficulty Another important factor to mention is that the ROI calculation is also based on the prevailing network difficulty which keeps increasing as time goes on.
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