With a single bitcoin valued at a little over USD 8,000, you may be tempted to run off and go mining for this cryptocurrency as soon as possible. However, before you do, you need to understand the details that determine the profitability of this activity. The time it takes to mine a single bitcoin affects ROI and depends on several factors. These include your choice of hardware, whether you do it alone or join a pool of miners, and a difficulty score (more on that later). As a result, mining just a single bitcoin can take anywhere from about a year to never. Still interested? Read on.
What Happens When You Mine Bitcoin?
The term “mining” is just a metaphor. It is all about validating transactions. As a miner, you will search, verify, and validate transactions from a pool of unconfirmed deals before adding them to the bitcoin block. You confirm entries by solving mathematical puzzles. In return, the system compensates you in bitcoin.
What Determines How Long It Takes to Mine One Bitcoin?
There are several factors that affect the process. First is the equipment you select. Mining for bitcoin requires you to solve cryptographic problems, so your hardware needs to be capable enough to accomplish this. Mining is also an energy-intensive operation, so your computer needs to be energy-efficient and sufficiently durable to withstand the demands of continuously operating at the max level.
The second factor is whether you decide to mine solo or join a pool. If you have enough computing power and the cost and availability of electric power is not an issue, you could opt to do solo mining. However, it would most likely take you longer to generate a bitcoin than if you pool your resources with others. The disadvantage of this approach is that in this case, you share the profits with the other members of the pool.
The third aspect to consider is an adjustable rating called “bitcoin mining difficulty” or just “difficulty.” It is a measure of how much work you need to perform to get paid. This factor is designed to keep the rate of producing blocks more or less constant at a rate of 1 block per 10 minutes. When more miners join in, validating transactions naturally takes less time. So the network raises the difficulty of slowing down block production.
Why does Bitcoin Need to Control the Rate of Mining?
The bitcoin network needs to regulate how fast miners find new blocks at a constant pace of 1 block every 10 minutes. Bitcoin’s creator, Satoshi Nakamoto, specified this pace to minimize inefficiencies in the mining process.
When a miner discovers a new bitcoin block (by solving the computational puzzle), the other miners need to stop working on the discovered block and move on to the next. Yet, it takes time for the information to be transmitted, and the users could be wasting resources as they continue to work on the newly-discovered block.
If it takes, on average, about one minute for the miner to get the information and a new block comes in every 10 minutes, then the workers would have wasted only 10% of their work. If a new block should be discovered every 5 minutes, then the wasted work would be 20%.
What Equipment do You Need to Mine Bitcoin?
You need to use a suitable computer hardware system. The PC or laptop you are currently reading this from will most likely be unsuitable for the task. It probably won’t have the computing power and performance efficiency required.
The process of bitcoin mining uses a cryptography algorithm called SHA256. SHA256 is a potent procedure, and not all computers are capable of handling this process. Therefore, mining for bitcoin calls for highly efficient hardware to perform billions of computations using as little electrical power as possible.
How Many Bitcoins are Left to Mine?
There are approximately 3.5 million coins left to mine. If there are no changes to the protocol and no new bitcoins are minted, then experts project that the last coin will be mined in 122 years.
What happens after all the bitcoins have been mined is subject to debate as no one really knows. Some speculate that this could drive the value of bitcoin up. In 122 years, we’ll see.