Anyone following crypto news has undoubtedly seen numerous articles that forecast Bitcoin’s (BTC) valuation following the upcoming halving slated to take place in May of this year. And although the price of Bitcoin is clearly important to the industry and investors at large, planning for the halving is particularly critical to cryptocurrency miners.
Once the halving occurs, the unfortunate truth is that the profitability of all but the most efficient mining operations will be greatly challenged. To stay in the green, many will either be forced to upgrade their equipment or to shut down their mining operations altogether.
However, careful planning can mitigate these risks, and there are several steps miners should take to set themselves up for sustained profitability in the wake of the halving. To understand all the factors at play, it’s important to review what makes mining profitable in the first place. This includes:
Hash rate and difficulty.
And the exchange rate of BTC to USD.
Hash rate and difficulty
The hash rate is the estimated number of tera hashes per second that the Bitcoin network is performing. It is a general measure of the network’s processing power and of how many times the network can attempt to add a block to the Bitcoin blockchain every second.
The hash rate is a good indicator of the network’s health, and while it can’t be precisely measured, it can be estimated based on the current difficulty and time of block confirmations of Bitcoin.
Mining Bitcoin is not easy, and it has only gotten harder as more miners have joined the network. The difficulty of mining a block correlates with the overall network hash rate, and thus with the competition. The more people trying to solve a block, the more difficult it is to do so.
Miners can increase their chances by employing high-powered application-specific integrated circuits that are efficient and always running. The ultimate goal is to solve a block that is worth more than it costs to solve. Miners can also improve odds by joining a mining pool, in which profits are shared with the other members of the pool and vice versa. Read More...