How Does Bitcoin Mining Work? Full Guide

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.

How to earn on Ethereum now. Analyst tips

ICB Fund’s Chen Limin talks about who will make money on Ethereum after the split

Ethereum cryptocurrency has moved to a new process – and soon it will be impossible to mine it with video cards. Cryptoanalysts state that it is still possible to earn from “ethereum”, but not for everyone. Stacking, which can be compared to a bank deposit, will be profitable with considerable investments – from three million rubles. What people should do with ETH in their wallets and where miners should go – in the article of Gazeta.Ru.

The Old New Ether

The Ethereum world has seen an update to The Merge, the cryptocurrency’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS). This means that now miners will not be able to mine new tokens. The process will be gradual.

Power in Ethereum has now shifted from miners to validators – users who contribute their share of coins to process transactions and add new tokens, Chen Limin, CFO and head of trading at the ICB Fund crypto fund, told Gazeta.Ru.

According to him, some miners who disagree with Ethereum’s policy intend to secede and continue mining ether on their own under an alternative name.

“Miners can now support a potential fork (division of one cryptocurrency into two different ones. – “Gazeta.Ru”) Ethereum and after the “merger” continue mining “old ether” with unclear prospects,” he admitted.

The expert notes that there will be two coins on the market – the base Ethereum (ETH) with stacking technology and the new Ethereum PoW (ETHW), working on the classic mining process.

Limin also talked about another option – some miners will switch to mining other coins that work on the EthHash algorithm. Ethereum Classic, Ravencoin, Ergo, Firo and Cortex are built on it.

But the situation alternatives will not save, stated the expert, to mine “ether” in any form – unprofitable.

“Profitability of “competitors” was lower than Ethereum before, and because of the overflow of miners to cryptocurrencies on EthHash many players will be forced out of business due to increased competition,” – explained the analyst.

99% green coin

The transition to the new algorithm will lead to powerful changes in infrastructure – now Ethereum does not require a huge amount of power to run video cards. The creators of the coin talk about a 99% reduction in power consumption.

According to him, in the coming months, graphics cards will become even easier to buy without fear of running out of stock in stores, and prices will continue to fall.

What’s instead of mining?

The main way of earning in the current environment inside Ethereum will be stacking, as the name of the process implies, said Rustam Burkeyev of Letit.

“Against the background of the fall of other cryptocurrencies, ethereum stacking is quite attractive in terms of profitability,” he noted.

Stacking is similar to a deposit in a bank, in that in both cases the owner receives interest on the initial investment. However, the return in the case of stacking is based on the ether user helping to keep the system running.

According to Burkeev, Ethereum owners can also explore options to earn money by trading the coin on the crypto exchange. “Trading can be profitable with the right asset allocation even when certain types of cryptocurrency fall,” the expert explained.

Chen Limin of ICB Fund believes that stacking is the best form of passive income in Ethereum after The Merge. The expert warns – only people with substantial cryptocurrency savings will be able to earn successfully.

“This will require depositing [to open a deposit in the cryptocurrency. – “Gazeta.Ru”] 32 ETH (about $48 thousand, or more than 2.8 million rubles at the current exchange rate) in a smart contract and then act as a validator,” – explained the analyst.

StakingRewards service estimates the yield of ether stacking at 4.64%.

According to him, it is possible to participate in stacking through services like Coinbase or Lido Finance. On such exchanges it is possible to buy some ether to a personal account.

Limin explained that the user then transfers ETH to the service for processing. The system takes into account each owner’s share of ether in the total mass of customers and accrues remuneration between them in proportion to their share. Most often the interest is accrued monthly, but other payout frequencies are also possible. But also not soon.

The services have no minimum amounts for investment, that is, it is possible to invest a few coins or even parts of ether coins, but we are not talking about three million rubles.

So currently, stacking is a rather slow way of earning a small amount of money. According to Limin, stacking yields could rise to 7-8% over time, but for now we should expect more modest percentages.

What will happen to the course?

“Ether did not react to the long-awaited news, although everyone expected growth, Artem Deyev, head of the analytical department of AMarkets, told Gazeta.Ru.

In his opinion, at present, the value of the coin will be determined rather by external conditions that affect the crypto market as a whole.

Chen Limin of ICB Fund, for his part, believes that The Merge brought the expected profit taking on the fact that expectations came true.

“On September 15, the exchange rate of the second most capitalized cryptocurrency fell by 10% in the moment. Prior to that event, Ethereum had shown better dynamics compared to bitcoin,” the analyst noted.

Limin is skeptical about the growth of the asset’s value in the near future.

According to his forecast, by the end of 2022, the U.S. Federal Reserve will carry out three more rate hikes and this can directly contribute to the growth of the cryptocurrency.

In this connection, it will be possible to speak about the “ether” rate at $3 thousand and more at $5 thousand only in 2023. The conditions for growth will be the Fed’s decision to change its policy and the presence of progress in the fight against inflation in the U.S., concluded Limin.

What to do with the equipment?

Vladimir Smerkis, director of Binance Russia, stresses in a conversation with Gazeta.Ru that Ethereum is still the leader in terms of liquidity and reliability of investments. And if ETH owners stay, miners will have to leave. There are three main options waiting for them:

  • switch to mining other coins (Zcash, Ethereum Classic or Ravencoin),
  • rent out equipment,
  • sell.

According to Rustam Burkeev of Letit, selling mining equipment is one of the main ways to preserve and increase revenues in the cryptocurrency market after the Ethereum update.

“It’s about selling the mining equipment and going completely into stacking. Of course, you can also try to switch to other cryptocurrencies,” concluded the specialist.

One of the world’s largest Bitcoin mining centers declares bankruptcy

Following the collapse in the price of Bitcoin, and other cryptocurrencies, several companies and platforms have declared bankruptcy due to losses.

Compute North, one of the world’s largest Bitcoin mining companies, filed for bankruptcy last week, as reported by specialized media such as The Wall Street Journal and Bloomberg.

The company, dedicated to providing services related to the cryptocurrency, including the data center for the blockchain in which it operates, decided to file for Chapter 11 of the US Bankruptcy Act, which allows companies to reorganize financially under the supervision of the US court.

In this sense, the Bitcoin mining center would be one more victim of the so-called “cryptowinter”, i.e., the bearish period that the cryptocurrency market has been going through for some months.

According to the US media report, the very fall in the price of the asset has caused the mining activity to lose profitability, especially in a context of rising electricity costs and global inflation.

Also, Yahoo Finance reported that decisions by Generate Lending, a Compute North lender, influenced the mining center’s financial situation.

Specifically, according to the portal, Generate would have taken control of some of Compute North’s assets after the latter failed to comply with some technical requirements that were established when both companies signed a loan agreement.

However, a lawyer consulted by the same media clarified that Generate Lending did not directly cause the bankruptcy of the Bitcoin mining company, although it did have an influence in accelerating the situation.

Since last May, the month in which most of the world’s cryptocurrencies began to collapse, several companies have faced serious losses of their capital, and some, such as the Celsius platform, have also declared bankruptcy.

Why will BTC be overtaken by ETH in the next cycle?

Bitcoin aims to become the global reserve currency and Ether aims to become the infrastructure of the global digital economy. However, the market value of these two is different, and this article will analyze the reasons why BTC’s market capitalization was surpassed by ETH.

Perhaps ETH overtaking BTC came earlier than expected.

Bitcoin’s goal is to become the global reserve currency, and Ether’s goal is to become the infrastructure of the global digital economy. Both visions are huge, so it would be better to compare the likelihood of the networks gaining their respective market shares.

Relative to its security budget, Bitcoin has never generated meaningful transaction revenue, instead heavily subsidizing security with block rewards. The current model is unsustainable and undermines its potential to become a global reserve currency.

Ether has become the base layer of the largest dApp ecosystem and has the best economic system of any cryptocurrency.

The network currently boasts.

$24.6 billion in DeFi TVL

84.7 billion in stablecoins

In 2022, it contributed to more than.

1.2T USD of DEX spot trading volume

526 billion in NFT volume.

I expect Ether to surpass Bitcoin by the end of the next cycle. Ether is about $150B behind in market cap, but the merger will be a strong driver of ETH fundamentals with its outstanding performance.

I expect Ether to overtake Bitcoin by the end of the next cycle. Ether is about $150 billion behind in market cap, but a strong post-merger performance will be a strong driver of ETH fundamentals.

If you look at just the dollar value of miners’ earnings, Bitcoin seems to be doing better.

Since 2016, miners’ annual revenue has been trending upwards.

But an analysis of the revenue composition reveals the problem behind …… Bitcoin heavily subsidizes security through block rewards. 95% of bitcoin miners’ rewards come from inflationary block rewards, while only 5% is real revenue from transaction fees.

PoW by design consumes a lot of energy. This is great for security, but it creates forced sellers because miners need to offset their production costs (electricity). Even with low inflation, 95% of all miner sales are newly minted BTC because little to no fees are incurred.

Bitcoin does not support smart contracts, so BTC is the only form of value that can exist on the network. Users must pay a fee on each transaction to transfer BTC. therefore, fee generation is dependent on the speed of circulation of BTC, yet users claim to be hoarders ……

In contrast, ETH is traded as a currency in the digital economy. Users pay ETH to transfer ETH, stablecoins and other tokens, or to interact with DeFi applications. Ether extends the possible actions beyond just sending, receiving and holding BTC.

During bull markets, Ether’s real revenue percentage increases along with total revenue, highlighting the reflexive nature of the network. However, when on-chain activity decreases, inversity suffers, as seen by the pullback in true revenue percentage in 2022.

Dividing 2022 into pre-merger and post-merger eras shows how Ether can address inflation through the diversification of verifier revenue. Post-merger, Ether validators receive 62% of their real revenue from transaction fees, ETH burns and MEV payments.

ETH burn and MEV are also correlated with the level of activity on the chain. More trading volume leads to higher base fee burn and more MEV opportunities. However, during the bear market, Ether net issuance was near zero and created positive value for pledgers.

The migration to PoS also resulted in a $1.7 billion reduction in ETH emissions in just 117 days. This is important for liquidity flows, as ETH requires less buying pressure to maintain the same price. Impact on Inflation?ETH has a 30-day annualized inflation rate of up to 0.00%.

Again, Bitcoin isn’t dead. It is widely adopted by individuals, public companies, and countries/regions from 2021-2022. Its community will likely work to prioritize sustainability in the near future, but its current trajectory will cause it to lag relative to ethereum.

Antminer S19 XP dropped in a bid to swing crypto miners back into profit

Phil Harvey said that this type of miner can typically last a minimum of 36 months in a facility operated by their crypto firm Sabre56.

With the Bitcoin BTC $17,154 price moving at a very steady pace during the crypto winter, the return on investment (ROI) on a new mining device seems like a shot in the dark. But a mining expert explained there may be hope for miners to make a comeback to profit. 

Phil Harvey, the CEO of crypto consultancy firm Sabre56, told Cointelegraph that there are factors to consider when checking the potential profit of mining devices. These are mining machine specifications, costs, real ROI and the economics of mining over time.

Analyzing the recently released Antminer S19 XP by mining rig provider Bitmain, Harvey noted that specs-wise, it’s the most efficient miner at the moment. In terms of costs, the crypto mining expert pointed out that the current costs of mining machines are significantly lower than in the past few months, especially if purchased directly from the manufacturer, estimating that it can go roughly $5,600 per machine.

In terms of what Harvey describes as the real ROI, the consultancy firm’s CEO explained that using their firm’s database, which tracks miner revenue from when the first ASIC miner came out up to the present, indicators show that large-scale miners can earn back their ROI in around 11 months.

On the other hand, considering the electricity costs for retail miners, Harvey said that it could take 15 months for them to get their ROI. He also explained that:

Commenting on the longevity of the new device, the CEO said that in a facility that they operate, this type of miner could last a minimum of 36 months.

Related: What happens when 21 million Bitcoin are fully mined? Expert answers

When asked if mining can be profitable in the long term, the expert also explained that mining revenue estimates don’t always play out the way it’s theorized. He noted that in 2013 and 2014 mining revenue estimates gained an average of $4,711.28. However, the real revenue turned out to be only $1,047.33. He explained that:

Harvey emphasized that the data shows that revenue per terahash will decline, projecting a potential mining collapse. But the mining expert argued that this is tangential to revenue per mining machine which he argues to have shown stability over time.

The detailed parameters about Ant Miner S19 are as follows:

Antminer S19 XP (140Th) Specifications

Antminer S19 XP (140Th) specifications, computing power consumption, power supply, usage environment and other related information are shown in the tables:

ModelAntminer S19 XP (140Th)
Also known asS19XP
ReleaseJuly 2022
Mining poolsSlushPool, NiceHash, Poolin, AntPool, ViaBTC
Size195 x 290 x 400mm
Noise level75db
Temperature5 – 45 °C
Humidity5 – 95 %