Bitcoin mining has become a huge sensation on the Internet in the last couple of years. And while it’s true that thousands of people around the world have become wealthy thanks to this currency, it’s not that simple to do it. Recent events suggest that Bitcoin mining may be entering a decline. If you’d like to learn if Bitcoin is dying and if it’s still worth doing, continue reading below!
How Bitcoin makes money
Bitcoin is not a company or an organization, so no specific owner or board of directors make money from the success of this currency. Bitcoin is simultaneously owned by no one and everyone, provided they have at least a single bitcoin. The people that mine this currency can be counted as employees, but they don’t have a boss and don’t receive a salary in the conventional sense of the word.
People that use Bitcoin make money by mining the coins or trading them with other users of this system. For the latter, bitcoins act as gold on a regular stock market. This is both the biggest advantage of this technology and its most significant drawback. Because while gold is a physical object that you can touch and hold in your hand, a bitcoin is a virtual currency. So every investment into this entity is a gamble at best.
Currently, it’s possible to mine about twenty-five tons of bitcoins every ten minutes. It’s also an established fact that this rate will fade away as time passes. Logically, with each passing day the process of mining this currency gets harder and harder.
In conclusion, there are two ways of how Bitcoin makes money:
- You can mine new bitcoins and sell them on the market.
- You can invest into already mined coins and then speculate with them online.
Why Bitcoin is falling?
As soon as Bitcoin reached its all-time high price at the beginning of September, things took a dark turn for its investors. Just in a little more than a week, it dropped more than a thousand dollars per coin and stopped at $3,500.
The reason Bitcoin is falling lies within the BTCChina’s decision to terminate all trading operations by the end of the month. As China is one of the biggest markets for bitcoin farming, such an announcement had a huge impact on the state of the currency. The Chinese government explained their determination to eliminate Bitcoin trading by their distrust towards cryptocurrencies in general.
Another factor that played a role in the price decrease of Bitcoin is the JPMorgan Chase's statement that the whole system is a “fraud” that is destined to fail and will send thousands of people around the world into bankruptcy. His words have at least some truth behind them. Because while regular currencies haw the law to back them up, bitcoins pretty much exist in a bubble.
Will Bitcoin rise again?
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The answer to the question asked above is "Probably yes". Judging by the patterns of recent years, the scandal and price drop related to China’s new regulation will prove to be a temporary setback. Although the fact that China holds up about eighty percent of the global bitcoin mining force does raise some valid concerns. People started to sell their bitcoins in a panic that the price would decrease even further, not realizing that their hasty decision was one of the reasons why it was lowering in the first place.
However, after people calm down, everything will return to normal. Bitcoins will once again walk on the path of slow, consistent growth. They remain the most potent currency on Earth, and if you purchase any coins under the three thousand dollar mark, you’ll reap substantial profits in the near future. Recent projections suggest that Bitcoins will return to the price mark of five thousand dollars per coin and will continue to grow further. How soon will that happen? That’s a bit more difficult to predict.
Bitcoins are safe for at least a couple of years. The competitors are far behind, and even if the entire technology will far apart, it won’t happen overnight. But will it happen eventually? Let’s talk about that below.
Will Bitcoin crash?
Previously, we talked about the optimistic development path of the Bitcoin technology, but what’s on the other side on the fence? We can see that Bitcoins rapidly fell from their record numbers. And even though the situation is stable right now, the fact that the global price can drop by one-fifth from a law enforced by a single country shows how unreliable the cryptocurrency really is.
Skeptics think that this setback is the beginning of the end. They are convinced that Bitcoin will collapse on itself in the following years. Why? Because at its core, Bitcoin is nothing more than a speculative bubble. And all bubbles are doomed to burst sooner or later. So let’s talk about what can happen if Bitcoin will crash:
- Everyone that has invested in this currency will lose entire capitals;
- Services that rely on Bitcoin consulting and market monitoring will disappear;
- All the other cryptocurrencies will suffer as well, due to the lack of trust to this type of investment;
- Economies of smaller countries that partly rely on Bitcoin will lose substantial parts of their budgets;
- Blockchain company models that aren’t necessarily connected to Bitcoin directly may receive a painful blow;
The potential Bitcoin crash will also prove to be beneficial to some groups. Thus, talented IT specialists that are involved in this enterprise and blockchain businesses will offer their services to other companies.
Is Bitcoin mining worth it?
If you’re looking for a short answer to this question then here it is: Bitcoin mining is worth it only if you’re capable of spending a sufficient amount of money before you begin mining. However, numerous other factors influence the profits you may reap from this undertaking.
It’s no wonder that you can find dozens of mining calculators that help you crunch the numbers to find out your potential income. They deal with such figures like the electricity cost, the price you pay for the hardware, the hash rate, mining difficulty, etc. It’s crucial to understand that most of these values aren’t consistent and change over time.
For example, the Bitcoin difficulty increases over time, in turn lowering the hash rate, and thus the entire equation changes. Add to that the unpredictable number of how many miners in the world there’ll be even a year from now, and estimating your profits becomes a nearly impossible task.
According to experienced miners, nowadays you can get rich by mining Bitcoins only if you invest in really powerful equipment and know how to save money on energy bills. However, as a whole, Bitcoin mining at home is dead. The competition in 2017 is more fierce than ever before. If you want to jump on the Bitcoin train, you need to do so in collaboration with other miners. Otherwise, you probably won’t even be able to earn enough to pay you back the money you spent on equipment.
Now you know the reasons for why Bitcoin is falling, and why it isn’t a good idea to start mining at home. Feel free to share this information with your friends and colleagues that may be interested in taking up this “hobby” themselves.
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