The Worst Thing to Happen to Bitcoin Mining When Bitcoin Price drops

I have been cloud mining Bitcoin since 2015. It was a great end to the year in 2017.  That being said it also had a negative effect on mining for Bitcoin (BTC) that is still being felt today. To understand this you have to know how BTC mining is affected by the overall Hashrate Mining Bitcoin.

Now Bitcoin mining works by (and not to get too technical) solving a very complex mathematical problem by trail and error. The more miners there is the harder the problem becomes and this is known as “Difficulty” and is by design of Bitcoin to make it a fair process.

 

When Bitcoin price boomed in late 2017 more and more people and companies became aware of the massive profits being made by miners.

Everyone wanted in. A person or company had a few options to get into mining, if you were an individual or company you could buy expensive mining equipment that uses a lot of electric power to run and mine your own Bitcoins, or you could sign up with a company that had equipment and sold contracts you could buy to mine bitcoin for you.  They, of course, would take fees for the equipment and electric costs incurred for mining and pay you in Bitcoin what was left. People choose to do cloud mining if they can not buy the equipment or do not have space or know how to run it. Cloud mining is an excellent way to avoid those issues. The measurement of the contracts Hashrate is in GH/s, TH/s and PH/s.

 

Simply put the more miners there are the more Hashrate is being generated to mine bitcoin and the higher the difficulty. When the price of Bitcoin boomed from less than $9000 to almost $20,000 in December, people were getting rich and of course when people become rich more people hear about it and want to get a piece of the proverbial pie.  So the “Goldrush” is on.

 

As you can see from the chart above the difficulty grew at an incredible rate. The higher the difficulty the longer it takes to mine bitcoin and overall it means the less you get paid. For example, in December 1TH/s of Hashrate would earn me about $2 to $3 dollars a day. Now that same 1TH/s makes me less than 18 cents a day. This is a direct result of the amount of people and companies that have gotten into mining, the amount of Hashrate they have at use and of course the drop in the Bitcoin prices recently. The only way to make money mining is when the Bitcoin price goes up faster than the difficulty rate.

The prices now are so low for Bitcoin that some miners who own their own Asics or other mining equipment are either switching to alt currencies to mine or are shutting off the equipment until it is profitable again to mine.

So to sum it up, if you are considering mining on your own, don’t mine Bitcoin but choose other Alt Coins. There are plenty of Alt coins that can be mined that are still profitable.  In my opinion, if you believe in Bitcoin the way I do and believe the price is going to go back up then buy Bitcoin and hold it until the price does recover.

If you are still interested in mining, however, you’re lacking some knowledge or equipment, there is a number of cloud mining services to consider e.g. best-known Genesis, Hashing24, HashFlare etc. I prefer to use HashFlare as a cloud mining service since they offer more than just Bitcoin to mine.


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