The Genesis Block, the initial block of the Bitcoin network, was mined on the computer’s central processing unit in 2009 by a person using the alias Satoshi Nakamoto. (CPU).

As the network’s computer capacity continues to increase and the market capitalization of the first cryptocurrency approaches its peak, mining has evolved from CPU mining to graphics processing unit (GPU) mining and, finally, to ASIC mining. CPU mining will therefore be essentially useless in 2022 and 2023.

However, the mining sector is still developing.

Despite occasional setbacks, the cryptocurrency industry is still growing, luring more and more newcomers to try and claim a piece of the crypto cake, especially through crypto mining, which is now feasible in a variety of ways.

Is GPU Mining Dead?

The majority of cryptocurrency enthusiasts have relied on mining with graphics cards or graphics processing units (GPUs) for a while to produce their digital assets, but Vosk believes that this method is no longer economically feasible.

The only graphics cards that currently generate more revenue than they consume in the form of electricity are four, and none of them generate more than 24 cents per day. Moreover, they cost between $600 and $2,000, leading the YouTuber to conclude that “GPU mining is completely obsolete.”

Alternatives to GPU mining

Vosk has examined a number of alternatives to GPU mining, but there are many others.

1) Hard Drive Mining

Hard drive mining, for example, using Evergreen Miner v2, a plug-and-play mining option that generates an average of $60 per month, is one of the most practical long-term cryptocurrency mining options.

Vosk recommends it for mining Chia (XCH) because it offers a mining rig that is quiet, produces little heat, and is inexpensive to operate. Prices range from $299 for a very basic Starter Kit to $2,799 for the Starter Kit Pro.

2) 5G Mining

In addition, Vosk mentions Bobcat miners like the Bobber 500 as a way to mine Helium (HNT) using 5G cellular and LoRaWAN wireless coverage, though this is not a very appealing or lucrative option given that his 18 Helium hotspot miners have only produced $1 per day.

His unpleasant interactions with Helium and NovaLabs have also turned him off, which contributes to his lack of trust in cryptocurrencies. However, he admits that “5G mining could prove to be lucrative whether people love that or hate that.”

3) ASIC Mining

The Bitmain Antminer K7, the second-most profitable miner after the Bitmain Antminer KA3 model, is another viable alternative to GPU and CPU mining that Vosk suggests, though he emphasizes that because it is a relatively new product on the market, the profit figures can change significantly.

Furthermore, he mentioned the Bitmain Antminer L7, which is available at the mining rig reseller CoinMining Central at the price of $10,725 a piece, whereas the K7 costs $5,728, slightly more expensive than on Bitmain’s website but comparably more available.

4) Equihash Mining

Furthermore, Vosk discussed Equihash mining, the algorithm that enables mining cryptocurrencies resistant to ASICs like Zcash (ZEC), which he advises taking into account despite criticism and derision of the token as “Z-trash” from many.’

Currently, there is only one miner showing up as profitable for mining Equihash cryptocurrencies – Bitmain Antminer Z15 from 2020 – which Vosk doesn’t see as very viable considering it is already three years old, and he projects many new Equihash mining devices replacing it very soon.

Crypto Mining is Still Profitable

Vosk’s final piece of advice is for viewers who already have equipment that makes a few dollars per day to keep using it, but to ultimately consider which option is best for them by running the numbers and comparing electricity rates.

Another choice is to build a crypto mining rig from the ground up, which may seem difficult to a beginner but, with some assistance, can become a fun and perhaps very rewarding activity that could pay off in the future, depending on the circumstances in the crypto field (and beyond).

However, using solar energy to mine cryptocurrency might be the best option, despite being a weaker one and with variable results, if independence from the local grid and compensating the electricity waste produced by mining Bitcoin (BTC) sound more appealing.

Key Terminologies

Cryptographic Puzzle – A decryption key is required to solve this particular type of puzzle because it uses cryptography to hide a secret message or piece of information.

Non Fungible Tokens – The ownership, provenance, and authenticity of these distinctive digital assets are confirmed using blockchain technology.

Mining Pool – It is a collective of cryptocurrency miners who pool their computing power to increase their chances of cracking cryptographic puzzles and obtaining rewards, which are then divided among the pool’s participants.

Mining Rewards – These are the rewards received by cryptocurrency miners for resolving difficult cryptographic conundrums and confirming transactions on a blockchain network, which typically take the form of freshly created coins and transaction fees.

Crypto Mining – It is a fiercely competitive, resource-intensive process that is becoming more specialized. The market is dominated by large-scale mining operations, which need specialized equipment and easy access to cheap energy.

Block Reward – It is the sum of cryptocurrency awarded to miners for successfully adding a new block to a blockchain network, and it frequently consists of freshly created coins and transaction fees.


Bitcoin mining is referred to as the method of verifying Bitcoin transactions on the blockchain and generating new Bitcoin just like a central bank printing new fiat currency.

These are the other elements involved in Bitcoin mining as well as how Bitcoins are actually mined.

Understanding Blockchain and Bitcoin

Before understanding how Bitcoins are actually mined, it is important to understand the concept of blockchain and Bitcoin.

Consider blockchain as a central ledger where all cryptocurrency transactions are kept track of. A blockchain is a specific type of digital data structure that enables the sharing of a ledger of digital transactions among a distributed network of computers. In short, a blockchain is a way of digitally documenting data on a distributed ledger.

A blockchain network, which is the foundation of Bitcoin, is made up entirely of computers and typically stores and records transactions. Only after each block has been examined and approved by miners are transactions added to the blockchain. Since the transactions are now already on the blockchain, it is no longer possible to change them after this.

Digital currencies such as Bitcoin use the distributed ledger technology, which is a unique feature of blockchain technology as it ensures no records can be altered, and thus offers a much better transparency of transactions. The Bitcoin blockchain network uses the latest cryptographic algorithm techniques of SHA-256, which is responsible for converting the data into a unique string of characters.

What is Bitcoin Mining?

The process by which new bitcoins are placed into circulation is known as bitcoin mining. It is an essential part of the development and maintenance of the blockchain ledger and is also how the network confirms new transactions. “Mining” is performed using sophisticated hardware that solves an extremely complex computational math problem. The next block of bitcoins is distributed to the first computer to solve the issue, and the cycle repeats.

Mining for cryptocurrencies is time-consuming, expensive, and only occasionally profitable. However, due to the fact that miners are compensated in cryptocurrency tokens for their efforts, mining has a magnetic draw for many investors who are interested in cryptocurrencies. This may be because entrepreneurial types see mining as pennies from heaven, like California gold prospectors in 1849. Why not do it if you have a flair for technology?

The bitcoin reward that miners receive encourages people to help with the main goal of mining, which is to legitimate and oversee Bitcoin transactions in order to ensure their validity. Because many users all over the world share these responsibilities, Bitcoin is a “decentralized” cryptocurrency, or one that does not rely on any central authority like a central bank or government to oversee its regulation.

However, before you invest the time and equipment, read this explainer to see whether mining is really for you.

Key Takeaways

  • You can earn cryptocurrency through mining without having to pay any upfront costs.
  • Bitcoin miners receive bitcoin as a reward for completing “blocks” of verified transactions, which are added to the blockchain.
  • The miner who solves a difficult hashing puzzle first receives mining rewards, and the likelihood that a participant will find the solution is correlated with their share of the network’s overall mining power.
  • To set up a mining rig, you need either an application-specific integrated circuit (ASIC) or a graphics processing unit (GPU).

Throughout, we use “Bitcoin” with a capital “B” when referring to the network or the cryptocurrency as a concept, and “bitcoin” with a small “b” when we’re referring to a quantity of individual tokens.

Why Bitcoin Needs Miners

Blockchain “mining” is a metaphor for the computational work that nodes in the network undertake in hopes of earning new tokens. Actually, miners are essentially being compensated for acting as auditors. They are doing the work of verifying the legitimacy of Bitcoin transactions. This convention is meant to keep Bitcoin users honest and was conceived by Bitcoin’s founder, Satoshi Nakamoto.1 By verifying transactions, miners are helping to prevent the “double-spending problem.”

Double spending is the illegal use of the same bitcoin by the same Bitcoin owner twice. With physical money, this isn’t a problem: When you hand someone a $20 bill to buy a bottle of booze, you no longer have it, so there’s no chance you could use it to buy lottery tickets next door. Contrary to popular belief, it is not physically possible to spend the same dollar twice. With digital currency, however, as the Investopedia dictionary explains, “there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.”

Let’s say you had one legitimate $20 bill and one counterfeit of that same $20. If you were to try to spend both the real bill and the fake one, someone who took the trouble of looking at both of the bills’ serial numbers would see that they were the same number, and thus one of them had to be false. An analogous task is performed by blockchain miners, who examine transactions to make sure users haven’t attempted to spend the same bitcoin twice inadvertently. The reason why this isn’t a perfect analogy is explained in more detail below.

Only 1 megabyte of transaction data can fit into a single bitcoin block. Satoshi Nakamoto set the block size limit at 1MB, but this has caused controversy because some miners think it should be increased to accommodate more data. If so, the Bitcoin network would be able to process and verify transactions more quickly.

Types of Bitcoin Mining

There are various methods and forms of mining bitcoin that each produce varying amounts of hashing power and block rewards. Here are the various ways that one can mine Bitcoin:

CPU Mining

Central processing units (CPUs), also referred to as the brain of a computer and containing all the circuitry needed to process input and output results, were used to mine Bitcoin when it was first introduced in 2009 and for the first time. Because there were few miners and Bitcoin was still in its infancy, it was simple to mine bitcoins using CPUs in the early days.

GPU Mining

GPU mining gradually entered the scene as graphics processing units (GPUs) became more and more competitive as Bitcoin’s acceptance and popularity grew over time.

GPUs based systems, which are mainly used for gaming, modern video editing, proved to be more efficient for mining with better hash rate than CPUs. 2010 saw the introduction of the initial GPU mining software. However, Bitcoin GPU mining was only used for a brief period before being replaced by ASIC hardware by 2015.

ASIC Mining

ASIC, or application-specific integrated circuit, is a type of hardware made specifically for mining cryptocurrencies. It was launched in 2012, and proved to be 200 times more powerful than basic GPU miners. However, ASIC mining rigs are very expensive, with prices ranging from $2,000 to $15,000. Buying ASIC miners might be very expensive because of variable power consumption, fluctuating electricity costs, and network challenges. The two most widely used ASIC miner brands at the moment are Bitmain Antminer and MicroBT Whatsminer.

Buy Antminer S19 – Most Profitable Bitcoin Mining Rig

The Bitmain Antminer S19 series, Bitmain Antminer S17 series, and Bitmain Antminer S9 series are just a few of the new Bitcoin mining machines that Bitmain has released.

Another excellent option for Bitcoin mining is the MicroBT Whatsminer M20, Whatsminer M30, and Whatsminer M50 series.

FPGA Mining

Field-programmable gate arrays, also known as FPGAs, are faster and more cost-effective than ASIC and GPU mining, respectively. As opposed to ASIC miners, which are designed to be locked into mining a single coin or algorithm, FPGAs are able to maintain strong hashing power. The kind of hardware technology gives flexibility to the miner to reuse the set-up if they change your mining activity for something else. Crypto enthusiasts who don’t want to spend a fortune on mining equipment should consider FPGA miners.

Cloud Mining

This is the most recent method of mining Bitcoins, where the miner can purchase a contract from a cloud mining provider who specializes in cryptocurrency mining equipment or a cloud mining service. This enables the miner to mine bitcoins without having to pay the setup costs and maintenance costs associated with mining hardware. However, one must be extremely careful when selecting a reputable cloud miner in order to avoid any scams or frauds.

Why Mine Bitcoin?

In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically “minting” currency. For instance, out of a total of 21 million bitcoins, there were just under 19 million in use as of March 2022.

All of those bitcoins were created by miners, with the exception of those that were created through the genesis block, the very first block that creator Satoshi Nakamoto created. The Bitcoin network would continue to function without miners, but no new bitcoins would ever be created. However, because the rate of bitcoin “mined” is reduced over time, the final bitcoin won’t be circulated until around the year 2140. This does not mean that transactions will cease to be verified. Miners will continue to verify transactions and will be paid fees for doing so in order to keep the integrity of Bitcoin’s network.

To earn new bitcoins, you need to be the first miner to arrive at the right answer, or closest answer, to a numeric problem. Proof of work (PoW) is another name for this procedure. For this proof-of-work activity to start, mining must be started in order to start looking for the solution to the puzzle.

There isn’t really any complex math or computation involved. You may have heard that miners are solving difficult mathematical problems—that’s true but not because the math itself is hard. What they’re actually doing is trying to be the first miner to come up with a 64-digit hexadecimal number (a “hash”) that is less than or equal to the target hash. Essentially, it is speculation.

Since there are trillions of different guesses that could be made for each of these problems, it is a matter of randomness, but it is still a very laborious task. Additionally, as more miners join the mining network, the number of potential solutions (also known as the level of mining difficulty) only grows. Miners need a lot of processing power to solve a problem first. To mine successfully, you need to have a high “hash rate,” which is measured in terms gigahashes per second (terahashes per second (TH/s) and gigahertz (GH/s).

Aside from the short-term payoff of newly minted bitcoins, being a coin miner can also give you “voting” power when changes are proposed in the Blockchain protocol. A Bitcoin Improvement Protocol (BIP) is what is used in this situation. In other words, miners have some degree of control over decisions regarding things like forking. You need to vote for these initiatives more often the more hash power you have.

How Much a Miner Earns

The rewards for Bitcoin mining are reduced by half roughly every four years.1 In 2009, when bitcoin was first being mined, one block would bring in 50 BTC. This was reduced to 25 BTC in 2012 by half. At 12.5 BTC in 2016, this had once more been cut in half. On May 11, 2020, the reward halved again to 6.25 BTC. You would have made $243,750 (6.25 x 39,000) for completing a block as of March 2022, when the price of Bitcoin was approximately $39,000 per bitcoin. Not a bad incentive to solve that complex hash problem detailed above, it might seem.

You can check the Bitcoin Clock, which continuously updates this information, to keep track of when these halvings will take place. It’s interesting to note that over the course of its history, the market price of Bitcoin has frequently tended to closely track the decline in the number of new coins put into circulation. Due to historically rising prices and increasing scarcity, the inflation rate’s decline increased the price.

Take Whatsminer M21S as an example:

[qn_miner id=”261″ field=”desc-profitability”]

The website CryptoCompare provides a helpful calculator that you can use to estimate how much bitcoin you could mine using your mining rig’s hash rate. Similar tools are available on other websites.

What You Need to Mine Bitcoins

Buy Whatsminer – A leading brand of mining hardware.

Earlier in Bitcoin’s history, it was possible for users to compete for blocks using a standard home computer, but this is no longer the case. The reason for this is that the difficulty of mining Bitcoin changes over time.

The Bitcoin network strives to have one block generated approximately every 10 minutes in order to ensure that the blockchain operates without a hitch and can process and verify transactions. However, if there are 1 million mining rigs competing to solve the hash problem, they’ll likely reach a solution faster than a scenario in which 10 mining rigs are working on the same problem. For that reason, Bitcoin is designed to evaluate and adjust the difficulty of mining every 2,016 blocks, or roughly every two weeks.1

When there is more computing power collectively working to mine for bitcoins, the difficulty level of mining increases in order to keep block production at a stable rate. The level of difficulty decreases as computing power is reduced. At today’s network size, a personal computer mining for bitcoin will almost certainly find nothing.

Mining Hardware

All of this means that miners must now make investments in high-end computer hardware like a graphics processing unit (GPU) or, more realistically, an application-specific integrated circuit (ASIC) in order to mine effectively. These can cost anywhere from $500 to several thousand dollars. Some miners, especially Ethereum miners, purchase individual graphics cards as a cheap way to put mining operations together.

ASIC machines, which in this case are designed specifically to mine bitcoins, make up the majority of today’s bitcoin mining equipment. Today’s ASICs are many orders of magnitude more powerful than CPUs or GPUs and gain both more hashing power and energy efficiency every few months as new chips are developed and deployed. With just 27.5 joules per terahash, modern miners can produce close to 200 TH/s.

An Analogy

Let’s imagine that after telling three friends that I’m thinking of a number between one and 100, I write that number down on a piece of paper and enclose it in an envelope. My friends just have to be the first to guess any number that is less than or equal to the given number. They don’t even have to guess the exact number. They can make as many guesses as they want, with no upper limit.

Let’s say I’m considering the number 19. Because 21 > 19, if Friend A guesses 21, they lose. In the event that Friend B guesses 16 and Friend C guesses 12, they have both theoretically arrived at workable solutions because 16 19 and 12 19 respectively. There is no “extra credit” for Friend B, even though B’s response came closer to the desired outcome of 19 than did B. Now imagine that I pose the “guess what number I’m thinking of” question, but I’m not asking just three people, and I’m not imagining a number between 1 and 100. I’m thinking of a 64-digit hexadecimal number instead, and I’m asking millions of would-be miners. You can now see that it will be very challenging to make the correct guess. The system collapses if B and C give their responses at the same time.

Although there are frequently multiple correct answers in the context of Bitcoin, ultimately there can only be one. The Bitcoin network will choose which miner to honor by a simple majority of 51 percent when multiple concurrent answers are given that are equal to or less than the target number.

Usually, the miner who has worked the hardest or, to put it another way, the one who has verified the most transactions, wins. The losing block then becomes an “orphan block.” A block that is not added to the blockchain is an orphan block. Miners who successfully solve the hash problem but haven’t verified the most transactions are not rewarded with bitcoin.

The Mining Process

What is a ’64-Digit Hexadecimal Number’?

Here is an example of such a number:


There are 64 digits in the number above. So far, comprehension isn’t too difficult. As you probably noticed, that number also includes letters from the alphabet in addition to numbers. Why is that?

To understand what these letters are doing in the middle of numbers, let’s unpack the word “hexadecimal.”

The decimal system uses factors of 100 as its base (e.g., 1% = 0.01). This, in turn, means that every digit of a multi-digit number has 100 possibilities, zero through 99. In computing, the decimal system is simplified to base 10, or zero through nine.

“Hexadecimal,” on the other hand, means base 16 because “hex” is derived from the Greek word for six, and “deca” is derived from the Greek word for 10, which has a hexadecimal system with 16 possible digit combinations. However, our numeric system only supports ten different ways to represent numbers (zero through nine). You must therefore add letters, specifically letters A, B, C, D, E, and F.

The hash’s total value, which is a 64-digit number, does not need to be determined if you are mining bitcoin. I’ll say it again: You don’t have to figure out a hash’s total value.

What Do ’64-digit Hexadecimal Numbers’ Have to Do With Bitcoin Mining?

Do you recall the analogy where the number 19 was written on a piece of paper and placed in a sealed envelope? The metaphorical unpublished number in the envelope is known as the target hash in the context of bitcoin mining.

Miners are making educated guesses about the target hash using those massive computers and numerous cooling fans. Miners make these guesses by randomly generating as many “nonces” as possible, as quickly as possible. A nonce is short for “number only used once,” and the nonce is the key to generating these 64-bit hexadecimal numbers As I keep mentioning, a nonce in Bitcoin mining is 32 bits in size, which is considerably less than the hash, which is 256 bits. The credit for finishing that block and 6.25 BTC are given to the first miner whose nonce generates a hash that is less than or equal to the target hash.

Although rolling a 16-sided die 64 times to generate random numbers theoretically could lead to the same result, why on earth would you want to do that?

The screenshot below, taken from the site, might help you put all this information together at a glance. You are viewing a summary of everything that occurred during the mining of block No. 490163. The nonce that generated the “winning” hash was 731511405. The target hash is displayed at the top. The term “Relayed by AntPool” refers to the fact that this particular block was completed by One of the more popular mining pools is AntPool (more on mining pools below).

As you can see, they contributed to the Bitcoin community by validating 1,768 transactions for this block. If you really want to see all 1,768 of those transactions for this block, go to this page and scroll down to the Transactions section.


How Do I Guess at the Target Hash?

A line of leading zeros appears at the start of every target hash. Although there isn’t a minimum target, the Bitcoin Protocol has set a maximum target. No target can be greater than this number:


A hash that has at least the minimum amount of leading zeroes specified by the mining difficulty is the one that a bitcoin miner will be able to successfully mine.

Here are some examples of randomized hashes and the criteria for whether they will lead to success for the miner:

You must purchase a quick mining rig or, more realistically, join a mining pool, which is a collection of Bitcoin miners who pool their computing power and divide the generated Bitcoin, in order to find such a hash value. Mining pools are comparable to Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. Instead of individual miners, mining pools produce a disproportionately large number of blocks.

In other words, it’s literally just a numbers game. You cannot guess the pattern or make a prediction based on previous target hashes. At today’s difficulty levels, the odds of finding the winning value for a single hash is one in the tens of trillions.6 Even with a mining rig that is extremely powerful, the odds are not favorable if you are working alone.

In addition to the high cost of the expensive equipment needed to have a chance of succeeding in a hash problem, miners must also take into account the significant amount of electricity that mining rigs use to produce the vast quantities of nonces necessary to find the answer. All things considered, most individual miners are currently largely losing money when mining bitcoins. You can enter information like your hash rate and electricity costs into the helpful calculator on the website CryptoCompare to get an idea of the costs and benefits.

Source: CryptoCompare

What Are Mining Pools?

The miner who discovers a solution to the puzzle first receives the mining rewards, and the probability that a participant will be the one to discover the solution is equal to the proportion of the total mining power on the network.

A small number of participants have a very slim chance of independently finding the upcoming block. For instance, a mining card that one could purchase for a couple of thousand dollars would represent less than 0.001% of the network’s mining power. With such a small chance at finding the next block, it could be a long time before that miner finds a block, and the difficulty going up makes things even worse. The miner might never get their money back. The solution to this issue is mining pools.

Third parties manage mining pools, which assemble miner groups. Miners are able to receive a consistent supply of bitcoin from the moment they turn on their miners by cooperating in a pool and splitting the payouts among all members. On, statistics on a few of the mining pools are available.

A Pickaxe Strategy for Bitcoin Mining

As mentioned above, the easiest way to acquire Bitcoin is to simply buy it on one of the many Bitcoin exchanges. Alternately, you can always leverage the “pickaxe strategy.” This is based on the adage that during the California Gold Rush of 1849, manufacturing the pickaxes used in mining was a wiser investment than panning for gold.

To put it in modern terms, invest in the companies that manufacture those pickaxes. An organization that produces tools used for Bitcoin mining would be the pickaxe’s cryptocurrency equivalent. You may consider looking into companies that make ASIC equipment or GPUs instead, for example.

Downsides of Mining

The risks associated with mining are frequently monetary and legal. As mentioned, mining involves a risk in terms of money because one might spend time and money buying mining equipment costing hundreds or thousands of dollars only to see no return on their investment. That being said, joining mining pools can help to reduce this risk. You should think twice if you want to mine but live in an area where it is illegal. It may also be a good idea to research your country’s regulation and overall sentiment toward cryptocurrency before investing in mining equipment.

A further potential danger stemming from the expansion of Bitcoin mining (and other PoW systems as well) is the rising energy consumption of the computer systems that power the mining algorithms. Though microchip efficiency has increased dramatically for ASIC chips, the growth of the network itself is outpacing technological progress. As a result, there are concerns about Bitcoin mining’s environmental impact and carbon footprint.7

However, there are initiatives to reduce this unfavorable externality, including the use of carbon offsets and the search for more environmentally friendly and cleaner energy sources for mining operations (such as geothermal or solar sources). Another approach is to switch to less energy-intensive consensus mechanisms, such as proof-of-stake (PoS), which Ethereum has adopted. However, PoS has its own set of flaws and inefficiencies, including a risk of consensus control centralization and an incentive for hoarding rather than using coins.

Because mining requires (computational) work, much like mining for gold or silver does, it can be thought of as the process of adding new bitcoins to the system. The tokens that miners discover are, of course, virtual and only exist within the blockchain’s digital ledger.

Why Do Bitcoins Need to Be Mined?

There is a chance that someone could copy, counterfeit, or use the same coin more than once because they are entirely digital records. Mining solves these problems by making it extremely expensive and resource-intensive to try to do one of these things or otherwise “hack” the network. Indeed, it is much more economical to become a miner on the network rather than to try to undermine it.

How Does Mining Confirm Transactions?

In addition to adding new Bitcoin to the market, mining is essential for validating and confirming fresh transactions on the Bitcoin blockchain. This is significant because no single body, be it a bank, court, government, or anything else, decides which transactions are legitimate and which ones are not. Instead, a decentralized consensus is reached through mining using proof of work (PoW).

Why Does Mining Use So Much Electricity?

Anyone could easily run a mining program from their computer or laptop in the early days of Bitcoin. However, the difficulty of the mining algorithm increased as the network grew larger and more people became interested in mining. This is because the code for Bitcoin targets finding a new block once every 10 minutes, on average.1

The likelihood that someone will find the correct hash sooner rises as the number of miners increases, which makes it harder to achieve the original 10-minute goal. Imagine if the network’s mining capacity increased by thousands or even millions of times. There are a lot of new machines using that much energy.

The Bottom Line

Bitcoin “mining” serves a crucial function to validate and confirm new transactions to the blockchain and to prevent double-spending by bad actors. New bitcoins are also added to the system in this manner. The task involves producing proof of work (PoW), which is inherently energy-intensive and is based on a challenging puzzle. However, this energy is embodied in the value of bitcoins and the Bitcoin system, which maintains the stability, security, and reliability of this decentralized system.

If the operation is successful, mining as we know it may disappear

Ethereum, the second largest cryptocurrency by trading volume and capitalization, is undergoing a major transformation this week – a transition to the proof-of-stake protocol. If successful, it will allow the digital platform to reduce power consumption by a thousand times and make Ethereum much more popular. Failure could have unpredictable and catastrophic consequences, and it is no coincidence that the transition has been delayed for two years. The details are in the Izvestia article.

The beginning of the end

It is not yet clear what will happen to the cryptocurrency itself once the new protocol is up and running. However, we can predict with high confidence that it will be the beginning of the end of the era of mining, which has already fallen on hard times.

Etherium has become the most popular next-generation cryptocurrency, rapidly gaining supporters within months of its launch in 2015. Unlike bitcoin, whose functions were limited to a payment instrument and a method of savings, which was a kind of virtual gold, Etherium offered a more systematic approach, creating a platform for “smart contracts” and several other services. It was expected that this would initially attract more users to the system. Expectations have been met – by early 2017, Etherium had reached a capitalization of $100 billion, coming in a strong second place behind bitcoin. Despite all the ups and downs, this position has been maintained and strengthened over the next four years.

Another important nuance: unlike bitcoin, which at some point could only be mined on specialized machines, ether was perfectly mined on ordinary video cards. This made it the most popular cryptocurrency among miners, but also proved to be a weakness of the system. In the ESG era, it became quite difficult to claim commitment to these values when your platform consumes about as much power as an entire Netherlands.

This was the main reason for the change, which is overdue and overdue. Ethereum founder Vitalik Buterin has been stating his desire to change the main protocol of activity since 2019. Almost every half-year began with the expectation that the transition would definitely happen in the coming months. For technical reasons, it has been delayed time after time. It got to the point where some analysts and bloggers began saying it would never happen. And yet, in September, the Rubicon finally came closer.

Changing the engine during the flight

There are several operating protocols in blockchain systems. The most common are proof-of-work and proof-of-stake. The proof-of-work scheme involves computers in the system competing to solve cryptographic problems to release each next block in the chain. Accordingly, the higher the power of the computer, the less time it will take to prepare the block. This process is called mining.

Priority is given to the owners of the most powerful machines, and the more total power is worked on to produce blocks, the harder it becomes to mine them. In an ideal situation, processing power, and hence power consumption, will tend to infinity.

Most existing cryptocurrencies, including bitcoin, operate on proof-of-work. They are responsible for the fact that the digital currency industry has become a major energy consumer worldwide, approaching the energy intensity of the top 10 countries in the world economy.

Proof-of-stake is organized differently. Only direct holders of the cryptocurrency, i.e. those who have a stake in ownership, can produce new blocks. In our case, we are talking about those whose wallets hold at least 32 Etherium. All of these transactions require virtually no energy – and that’s the main advantage of proof of ownership.

As for the disadvantages, they are also on the surface. The main strength and source of popularity of cryptocurrencies is decentralization. However, proof-of-stake, on the contrary, promotes centralization and control over the system, which can appear at the largest players. We should not forget that although several currencies are already running on proof-of-stake (Cardano, Solana and others), this system is generally less tried and tested in practice compared to proof-of-stake. Ethereum will be the largest platform to move to this scheme.

Why the transition took so long

It is easy to announce a protocol change, but it is much more difficult to perform such a task in an already working system. In fact, no one in the cryptocurrency world has ever done an event of this scale. The project, which has been in operation for seven years and has a capitalization of hundreds of billions of dollars, will be completely overhauled. Industry analysts compare the transition to changing the engine of an airliner during a flight.

The project began with the creation of a parallel Beacon Chain network in 2020, which acted as a guinea pig. Now, after the system has passed a number of tests, it is being connected to the main network. The process started on September 6 and should be completed within two weeks (no one knows the exact date, September 15 being one of the estimated numbers). In fact, there is still the not-so-small possibility that something will go wrong. In that case, the disappointed participants will be able to return to the old chain. If such turns out to be the majority, it is the one that will continue to work.

How will Etherium change after the transition

For users, at least at first, there will be no changes (again, assuming everything goes well). The cost of transactions will remain the same. Transaction speed, still the Achilles’ heel of crypto, will not increase much at all. Now a block of Etherium is released every 13-14 seconds, after the change this time will drop to 12 seconds. Interestingly, Etherium will be inferior to a number of cryptocurrencies, such as Solana, although it will be many times better than Bitcoin.

It is unclear what will happen to ether quotes. The transition is unpredictable, and a failure could collapse the cryptocurrency many times over. There are also questions about the security of Ether in the long term. All of this could have a negative impact on the exchange rate. On the other hand, a successful passing of the test may cause a small rally in the market, but it is unlikely to be anything exceptional. The market has probably already built its expectations into the quotes.

What will happen to mining

This is perhaps the most intriguing question. These are not easy times for miners. During the year, the cryptocurrency industry as a whole suffered significant losses – bitcoin and etherium rates fell 3-4 times. At the same time, the cost of mining continued to grow due to both increased complexity and a huge increase in the price of electricity (in Europe, for example, it rose in price 10 times). Small players are rapidly dropping out of the market, and the major players suffer losses, the value of their shares fell by 50-60%. A significant part of video cards, on which most cryptocurrencies are mined, now pay back their investments for 2.5-3 years or even more, while in 2021 six months were enough to pay back their funds and start working in the black.

Now, on top of everything else is the departure of etherium from traditional mining. More than half of all miners (not counting bitcoin) used to work on ether. Now they will have to look for some alternatives. If the success of the proof-of-stake scheme is undeniable, the computer miners have no serious chances – there are no equally popular currencies in the world. This will provoke a desperate struggle for a rapidly shrinking piece of the pie and in all likelihood draw a line under mining as a serious commercial activity.

Bitcoin mining is a process that arouses a lot of curiosity, both for cryptocurrency lovers and for those who are just discovering how it works.

In short, mining is the process in which new bitcoins are created as a result of the work of machines made available to secure the network and validate transactions. To achieve this, the machines must solve highly complex mathematical problems, which requires large amounts of computational power and electricity.

Miners put pending transactions into virtual blocks, which, as they are validated, are stacked into a chain. This is where the name “blockchain” comes from. Once the transaction has been validated and the block containing it added to the blockchain, the process is irreversible. For all this work of validating transactions and recording them in the blockchain, they receive a reward in the form of bitcoins. This is how they are created.

But to add transactions to the blocks, they must first discover them. The first miner (or group of miners) who discovers the next block will earn a reward in bitcoins. Currently, it is 6.25 bitcoins for each block discovered, but this figure is reduced every 4 years in a process called halving.

The discovery of new blocks is a constant lottery. Those with more powerful machines are more likely to discover the block. Usually, this process is carried out in mining pools, where several miners pool the computational power of their machines to have more chances of discovering blocks, and then share the reward. Even so, there are already cases of individual miners and with only 1 machine that have managed to take the reward. This whole process is called “Proof-of-Work (PoW).

For the CEO of, Guillermo Torrealba, “Mining plays a fundamental role in the security and operation of Bitcoin, validating transactions and creating new blocks that are responsible for updating the accounting status of the network at a specific time. Since it does not depend on a particular entity or machine, but on the sum of all the power of the network, bitcoin has an unparalleled level of security. Today, bitcoin is the most secure network in existence, thanks to mining.”

Bitcoin mining and the environment

Cryptocurrency mining has been highly questioned by environmentalists, as it consumes a ton of computing power and electricity, raising concerns about the cost to the environment.

According to data from the University of Cambridge, the United States is the second country in the world with the highest electricity consumption, ranking only behind China. In terms of bitcoin mining, it ranks first with 35-40% of hashrate (power used to mine and process transactions in a network).

That is why over the years, in countries such as the United States, Canada, Paraguay and El Salvador, miners have relied on the investment of each of their countries in different types of renewable energy, such as solar, hydroelectric and geothermal energy. This has led to a favorable decrease in greenhouse gas emissions through the use of cleaner processes.

Likewise, there are studies, such as BitcoinNet Zero, which state that, although bitcoin’s energy consumption can be considered high, it does not even represent 0.04% of global consumption. joined the environmental debate, with a live stream that discusses the implications of bitcoin mining. It shows how Bitcoin mining can help the world reach 100% renewable electricity use and compares Bitcoin’s energy consumption with other industries, such as gold and banking. The result is that most of the electricity Bitcoin uses today comes from renewable sources, and that this global crypto network also uses a fraction of the energy required in the gold mining and banking industry. is the leading cryptocurrency exchange in South America and has more than 450,000 users in Chile, Peru, Colombia and Argentina; and an average monthly transaction volume of more than USD 112 million.

The platform is the first of its kind to be certified with the Carbon Neutral seal, which guarantees the measurement and compensation of the carbon footprint, by developing and executing a set of its own actions and with its suppliers that allow it to mitigate emissions and promote a sustainable financial system in harmony with the environment. is also currently implementing initiatives aimed at raising awareness and demonstrating that it is possible to build a new financial industry that is fairer to people and the environment. One of them is the alliance with Fundación Legado Chile, where the national exchange confirmed its commitment by allocating part of its funds to the conservation of endangered ecosystems and committed to work hard to contribute to protect the environment, promote circular economy and expand the activity throughout Latin America.

Think back to the horrible history of the mint projects that got so much hype. Why were they doomed to fail and never turn around?

With Memeland’s NFT project CaptainZ on sale, I think it’s a good time to take a look back at the mint projects that have been hyped so you can make an informed choice and decide whether to invest.

Let’s get started.

The first NFT mint to really make a big splash was none other than MekaVerse.

There may be more than a few of you who may not have been in the NFT field at the time, but that was the first time a huge frenzy erupted before a project mint opened.

Mekaverse was destined to become the new top project. With well-known artists behind it and a community of thousands of people, such a large community size was not “normal” at the time.

For days, if not weeks, the attention of the NFT community was focused on Mekaverse.

The 0.2 ETH ($500 at the time) mint sold out quickly, with a reserve price of 8.5 ETH on the secondary market.

Mind you, the reserve price was typically much lower than that back then.

At that time BAYC was priced at 30 ETH. so 8.5 ETH would be equivalent to having a project enter OpenSea today at a mint price of 25 ETH.

However, after reveal, the floor price plummeted. fud reached a new all-time high. People made jokes about this art. Within days, Mekaverse was forgotten.

The second mint story that got a lot of hype was @HAPEsocial (when it was called “Hapebeast”).

The first trailer drove everyone crazy, everyone wanted an allowlist spot because Hape mint was only open to people on the allowlist list. So people did everything they could.

Thousands of people were active on Discord 24/7 creating all forms of art.

I was there and it was a crazy time.

Hape was minted in January 2022 after several delays. Azuki was also minting at the time, but the Hape fever was at a completely different level.

When Azuki entered Opensea after mint at 2 ETH, Hape was at 8 ETH and later went up to 9.5 ETH.

Everyone wants a Hape. a rare Hape means heirloom wealth. At least that’s what we thought.

Again, the panic after reveal is huge.

There are a few minor flaws about this collection, such as some Hapes with ears through the cap, which were blamed on the item itself.

After the 2 ETH drop, it was once thought that the program would recover.

But it only got worse and worse. Today, its price is 0.5 ETH ($600), which is 95% below its all-time high of $25,000.

Let’s finally look at InvisibleFriends

After the Mekaverse and Hape, doubts rose within many, but backers said their usual thing: “This time it’s different” – and some took it on faith.

Invisible Friends entered Opensea with a reserve price of 10 ETH, and the 1/1 Invisible Friend auction even raised $1.3 million.

But Invisible Friends also crashed after mint. It didn’t fall as hard as the two projects mentioned above, but it was down 75% even in ETH terms.

So why is the much-hyped mint always doomed to failure?

The answer is the same as the reason for their success: attention.

The high-profile mint projects have a very high profile.

They get a lot of publicity precisely because everyone is talking about them.

There is no second opinion on NFT Twitter, everyone wants a piece of the action and doesn’t miss the next big thing.

After Hape mint came Invisible Friends, and after Invisible Friends came the next project.

The biggest asset of the hyped mint project was the attention it attracted, which later led to its failure.

Because without the hype, investors naturally ask themselves the question: Why should I spend $25,000 to invest in a new project that hasn’t produced anything yet?

In my opinion, this is also the case with CaptainZ

Right now Memeland is the king of the conversation on NFT Twitter, but after mint comes BAYC’s the Trail of Jimmy THE Monkey and then Azuki’s anniversary. it’s going to be hard for Memeland to maintain the current level of attention.

Memeland seems to understand this, which is why, like Potatoz, they will delay the reveal for weeks, if not months.

Maybe this helps attract attention, but it can be very difficult.

The second major reason these types of programs always fail is that people don’t like to see others win.

The Mekaverse is only open to people on the allowlist, and so is Hape and so is IF.

Those who are not on the allowlist list – and maybe they do spend a lot of time on fanart (fan art) – will inevitably eat their words and create FUD until the project hits rock bottom.

That’s degen psychology.

Also, the holder at the time of reveal is usually not the one who has worked hard to get the allowlist slot.

I bought into Hape at the time and everyone said they would never sell.

But they all sold the next day.9 The price of ETH is obviously a good reason to sell.

So most holders were just speculating, lending it to make ETH. once FUD went up, they left the market too. The project started to freefall.

Memeland went the allowlist path as well, open only to those on the list. The emergence of FUD is inevitable.

Nevertheless, I think Cpatainz will be very resilient. I’m not saying “it’s different this time”, but the drop won’t be that big.

However, looking back at the history of mint hype we can see: don’t fomo

These projects usually do deliver.

Mekaverse ventured into video games, Hape just announced a partnership with Diesel, and IF released amazing 3D animation.

But almost no one is asking for it. People have turned their attention elsewhere.

This is where the sadness lies.

Bitmain’s Antminer S19 Pro and its 100 TH/s of power is on offer, although the market does not favor Bitcoin miners as of today.

The most recognized manufacturer in the world of Bitcoin miners today, Bitmain, lowered the price of the Antminer S19 Pro ASIC device to USD 1,900 per unit. This, while making it more affordable than ever, comes as a consequence of the low profitability offered by the fall of bitcoin (BTC) in the exchange market.

Bitmain made this campaign public via its Twitter account. The current price of the S19 Pro is 80% lower than it was in January of this year. For this reason, those who have purchased the hardware model in question prior to the offer are eligible for discount coupons for future purchases.

The Antminer S19 Pro is one of Bitmain’s most powerful devices today, after the S19 XP and the S19 Pro+ Hyd. Despite its mining power and being a device with only about two years on the market, its performance today is not good.

Bitcoin miners operate in the red
According to the ASIC Miner Value website, the current profitability of mining Bitcoin with an S19 Pro is USD -0.16 per day; that is, it would be mined at a loss. It should be noted that this result is based on the current price of BTC (which is around USD 18,800) and an electricity service cost of USD 0.12 per KWh. In addition to this, the mining difficulty of this network is at an all-time high, as recently reported by CriptoNoticias.

While the figures on the profitability of mining with an Antminer S19 Pro do not look encouraging, Bitmain reviews a phrase in its publication to encourage its potential customers: “be prepared during the bear market, thrive during the bull market.” This quote, as encouraging as it sounds, does not clarify the risks of making an investment to get into Bitcoin mining.

It is of utmost importance to be aware of market instability, network variations and other aspects external to Bitcoin, such as electricity costs and quality of service, as well as measures that may be taken by the authorities on cryptocurrency mining.

This is not the first price cut Bitmain has announced so far this year. The most recent was last month, when they put on offer models such as the S19 XP and S19 J. In fact, CryptoNews reported that Bitcoin mining hardware prices are at 2020 levels, just before the market’s uptrend at the time awoke.