MBR Publications Ltd.
Highland Apartment 1, Naxxar Road BKR 9042 Birkirkara Malta,
Phone: (+356) 2149 7814
Mobile: (+356) 9940 6743
FOLLOW US ON
For more information, please write us: email@example.com
DYNAMIC EVENTS LIMITED
Farmed by WEBIDOO
Bitcoin mining: how it works and is it still profitable?
You might have heard about the tech-savvy enterprising souls making a small fortune from mining Bitcoin. There they are, sitting back, counting the profits while the computer does all the work. Certainly, it sounds like a nice way to earn a bit of extra cash but, in 2019, is it a realistic way of making money from home?
Bitcoin mining — what is it?
In order to secure newly released Bitcoin, one has to ‘mine’, the process of using computing power to secure the network and process every Bitcoin transaction, achieved by solving computational problems which chain together blocks of transactions.
Every 10 minutes, a “block” of bitcoin transactions is solved by miners and added to the bitcoin blockchain and the ‘block reward’ of 12.5 BTC is released to miners.
How much do miners earn?
Miners currently share circa 58,425 bitcoin per month (worth $690m at the time of writing). Of course, this will reduce by 50% after the halving, but it is clear we are talking about significant revenues.
With these revenues in mind, we must look at the current miners and their operations.
It was intended that any computer could mine, but entrepreneurial technologists soon worked out they could gain an advantage.
Ten years ago one could use a vanilla laptop, or desktop graphics processing unit (“GPU”) to mine bitcoin, but following the release of the code for mining bitcoin to the general public in October 2010 and the increase in difficulty, smaller miners turned to field-programmable gate array’s (“FPGA”), an integrated circuit designed to be configured by customers after manufacturing.
The well explored problem with mining is the ever increasing power usage requirements, FPGAs improved on GPUs as they used one third of the power. However, these were quickly replaced by application-specific integrated circuit (“ASIC”) systems, at which point mining moved from a hobby and side-income, to an industry, with significant investment and mining ‘arms war’.
The clue is in the name ‘application-specific’, these are designed specifically for the purpose of mining bitcoin and outperform the previous methods.
So, can I make money from home mining Bitcoin?
Today, trying to mine bitcoin with a laptop or desktop computer will yield less than a penny a year and cost plenty in electricity, so one is best simply purchasing bitcoin through a reliable service, especially if it is intended to simply purchase and hold the asset.
One can purchase an ASIC miner, although as a stand-alone miner, you have little chance of rewards as you are effectively betting on your rig against industrial grade operations, so one would be best served by selecting a mining pool. In joining a mining pool, one shares their hash rate and if the pool finds a block, each contributor is paid a percentage of the Block Reward based on the percent of hash rate contributed.
Given the cost of purchasing the hardware, forthcoming halving and current price of bitcoin, if the intent is to earn bitcoin, one would be best served simply buying and holding it.
However, if interested in mining, perhaps the best option research potentially profitable alternatives. Litecoin has just had its halving and some miners will be retiring affording the potential to purchase decent rigs cheaply. One can purchase an Antminer L3+ as low as £130 on ebay, while a newer model from a reputable refurbisher can be as little as €500.
As an optimistic hobbyist, perhaps one could look further outside the box, especially if intending on mining with a GPU of an older, idle laptop or desktop and target a Aeon, or Electroneum, both prime for GPU mining. One does have to consider the future sale however, and Aeon’s daily trading is just $4,249 at the time of writing, whereas Electroneum is $136,179.
These are just two examples and if considering mining, one should do a lot of research into the type and cost of hardware, rewards, electricity usage/cost, depth of market for the coin, how many exchanges have it listed and make a judgement-call on the likely future success (or not) of the coin — why is it different, what is interesting about the technology, who is going to uses it over other coins, are the parties long-term interests aligned etc.
Key to fully secure crypto tokens
The key to fully secure crypto tokens is hundreds of years in the making
There are plenty of people – some ignorant, some with vested interests – looking for any excuse to highlight the apparent shortcomings of blockchain technology. Sometimes – too often, actually – the industry leaves them a gaping open goal.
Little does more to undermine the faith in cryptocurrency than a security scandal. Accounts are hacked, user data is mishandled, millions are stolen – it’s understandably headline-grabbing stuff and it’s massively damaging to the reputation of the crypto space.
How can we expect blockchain to be taken seriously and achieve the mass adoption we hope for when security remains such a perceived failing?
In July we had the news that Bitpoint, the exchange based in Japan, had been forced to halt trading, with $32m of users’ funds stolen.
Another day, another hack: $32 Million stolen from Japanese cryptocurrency exchange
It was by no means the first time crypto exchange users have lost their money – Binance was targeted by hackers earlier this year and QuadrigaCX collapsed after the death of its CEO meant no one was able to access the stored funds.
And you can bet the next embarrassment is just around the corner.
Back to the future
Security is one of the strongest features of blockchain technology. The vulnerabilities are, in many cases, human-error. When humans are involved, the cracks begin to appear.
One of the main reasons exchanges are vulnerable is because storing tokens is not their priority. In fact, as every crypto trader will tell you, it is never a good idea to store ones tokens on an exchange.
Exchanges make their money from listing tokens, launching Initial Exchange Offerings, liquidity provision and customers trading tokens, not storing them, so many don’t go to the lengths required to keep digital assets fully safe.
The good news is that the issue is completely solvable using a combination of cutting-edge technology and a method that’s been around for a few hundred years – good old-fashioned insurance.
The opportunity has been identified by a small number of third parties, giving companies handling crypto the chance to offer their users complete peace of mind.
One such is MetaVault based in the Isle of Man (full disclosure – they are among our partners at SolutionsHub). MetaVault is a digital asset custodian offering a storage solution insurable up to $500m and above, with London based A-rated underwriters. They already have several high-profile clients who have recognised the need for action.
Insured storage means that, in the unlikely event that tokens are stolen or lost, customers are guaranteed to get their funds back – unlike with so-called ‘self-insured’ solutions.
Vote with your wallets
Convincing exchanges too learn from history and that insurance is the way forward might be a tough sell – particularly those that are less reputable.
The shift towards improved security, better protection of user data and a general improvement of standards will come when consumers demand it, or regulators require it. It’s only a matter of time before the untrustworthy actors in the crypto space are all-but eradicated as users realise the importance of choosing a service that is safe and secure and take their money to the companies who they can be sure will look after it properly.
That will drive down the number of security scandals which, in turn, will elevate consumer confidence, strengthening the trust in the sector.
Unikrn COO’s praise for SolutionsHub team
The team at SolutionsHub have been praised for our “unparalleled” understanding of blockchain and cryptocurrency.
SolutionsHub worked with pioneering esports betting company Unikrn to obtain an Isle of Man gambling licence following its successful initial coin offering and launch of the company’s own cryptocurrency – Unikoin Gold.
Unikrn COO Andrew Vouris said: “From the moment we engaged Solutions Hub, their understanding of the Cryptocurrency market and Blockchain mechanics were unparalleled.
“We challenged their team with an extremely short runway for our license application, and they embraced the challenge head on and succeeded, driving our business and complementing our existing processes and resources.
“Given this was one of the first applications coming out of an ICO the Isle of Man Gambling Commission was processing, the obstacles faced were new and complex.
“Navigating a path which showcased the level of due diligence and rigour we undertook in our presale was crucial, and also suggesting an independent audit of the presale wallet addresses, not only ensured we were ultimately successful in our license application but has potentially driven a pathway for future ICOs to obtain licenses.”
‘Part of the family’
The SolutionsHub team of Lee Hills, Nick Wright and Emma Weston have vast experience in the financial services industry and specialise in regulation and licensing, particularly in the gambling space.
Andrew added: “The team at Solutionshub, complimented and understood our business so well, that we engaged them to additionally assist with the sourcing of resources for our on Island Compliance Team, and in an interim capacity whilst these crucial roles were in the process of being sourced assumed significant roles which allowed Unikrn to trade immediately.
“On a personal note, Nick and Lee have now become part of the Unikrn family from our perspective. It is impossible to think we would have achieved the same result with any other provider I have seen in my experience across any of the jurisdictions I have worked in.
“I’m excited to see the direction SolutionsHub continues to grow into.”