If we take an honest look at the history of finance, we can see that the banking system has actually changed very little since its inception. Sure, we’ve seen the rise and fall of many technologies and currencies but things remained pretty much the same. It should be no wonder then that the rise of the alternative threating to shake up this stale system to its very core was met with a certain distrust.
Let us try to answer then once and for all what is Bitcoin mining and does it make financial sense in 2020.
What is Bitcoin and how does it work?
Essentially, Bitcoin represents a decentralized alternative to existing banking infrastructure. From a purely technical standpoint, this system represents a software platform (blockchain) backed up by numerous computers used for solving complex math equations. In return, the blockchain generates a fixed amount of “bitcoins” and rewards participants with “block rewards” (bits of this digital currency).
The digital bits you earn through this process are a viable currency used for digital transactions all around the world. Of course, you can keep bitcoins in a hardware wallet until the price is right or exchange bitcoins for physical assets as well.
The matter of mining difficulty
If you have gotten the impression by now that mining consists of hooking up the PC into the blockchain and watching money pour into your account, you are wrong. The blockchain rewards the participating hardware based on computing power. Using your PC for this purpose won’t produce tangible earnings no matter how long you use it for computing.
In order to participate in this in any sensible manner, you will need to invest in professional cryptocurrency mining equipment with high computing power, provide the space and the cooling and spend considerable time doing maintenance. In short, mining is a job that requires both time and effort.
Now keeping all this in mind, does crypto mining still make a viable investment option even as the blockchain experiences constant influx of new users and the reward system remains fixed?
The benefits of investing in the Bitcoin market in 2020
The short answer to this all-important question would be yes. Even though it seems the glory days of cryptocurrencies have passed, this banking alternative still offers a couple of unique benefits that make it a more than favorable investment. Let’s quickly go through some of the most important mentions.
The contemporary ASICs are very efficient
One of the main concerns in regards to the profitability of the mining hubs lies in the amount of power they use. The good news is that the latest generation of ASICs (application-specific integrated circuits) does a much better job making this market more sustainable. Of course, the profitability of these setups largely depends on the local power price, but you can use some of the online calculators to get to the bottom.
The bitcoins are valuable assets
Although they had experienced a fair share of fluctuations, bitcoins have recorded a 68,836.94% growth over the last seven years and followed every drop with a quick rebound. In the near future, things are expected to remain on a stable course. As a matter of fact, some influential industry voices predict that Bitcoin will get to over $100,000 by 2020.
Low transaction fees
Finally, the fact remains that the Bitcoin market represents an egalitarian environment that features nearly non-existing transaction fees and no intermediary government involvement. Because of that, bitcoins are not only a very sought-out asset that grants a certain dose of anonymity but also a very versatile currency that produces no additional costs during transactions.
So, when all things are said and done, we can observe that, in spite of a certain impression of saturation we are getting from some media outlets, Bitcoin mining still represents more than a solid investment option worth checking out. However, you have to be aware that no one will hand you out free bucks. Achieving success requires time, effort and money.