Over the past few months, we observe many developments in the crypto mining industry. Many countries are starting to use their energy reserves to mine Bitcoin, in order to enrich their cash reserves with the popular cryptocurrency. Obviously, countries and states have huge electricity deposits, which makes the process of mining a much better idea than it would be to buy Bitcoin OTC.
But what about the new investor, or anyone who is looking for alternative ways to earn passive income. Is mining Bitcoin still profitable and relevant in 2020? And if so, what would be the best way to get started?
The mining scene in 2020
As the cryptocurrency space keeps on growing, many miners have decided to form groups (known as mining pools) to increase their chance of earning mining rewards. Nowadays, this is the only way to earn a respectable amount of Bitcoin when choosing to build your own mining rig. This is because of how the network (and consensus model) is designed to operate:
- When an investor wants to send Bitcoin, he will need to create a new transaction, which is fueled by a small fee (miners fee).
- This transaction is grouped by a large number of transactions over a 10-minute window. This is known as a transaction block.
- While solving the transactions of the block, all network participants (miners) will get paid in fees, but only one node will get the block reward (6.25 BTC per block). The miner that receives the reward is the one that solves the last transaction of the block.
- Since the network of Bitcoin is rather overcrowded, mining pools allow individual nodes to come together, sharing their hash rate, and thus the potential for a block reward. If a mining pool manages to receive the block rewards, it shares the amount with all the participants of the pool.
Obviously, this process makes hashrate really important. For that reason, over the past few years, new hardware solutions have started to emerge. Among all the available options, the most popular one at the moment is the ASIC miner. The brand has released a large number of mining hardware solutions, ranging from $100 for single pieces up to $10.000-12.000 when building a mining rig. This investment may sound extraordinarily large but is relative to the rewards you can expect to receive. To understand which option works best for your needs, consider using this profitability calculator.
So, is mining Bitcoin still a good idea?
Yes, Bitcoin mining can be very profitable even in 2020, if a certain set of criteria are met:
- You will need to consider investing a significant amount of money for an uncertain return. This is due to Bitcoin’s volatility.
- If you wish to maximize your returns and thus the potential of your investment, you will need to join a mining pool. Here is a list of the most popular mining pools currently available.
- You will need to do in-depth research to understand which miners are worth investing in. To help you with this process, we will show a few of our favorite miners in the following chapter.
Best Bitcoin miners in 2020
In this section, we will briefly delve into our favorite low-cost options that are great for beginners and hobby miners. Obviously, as you become more experienced, your mining demands will grow. However, when you are first starting out, and in order to practice, it might be best to go with any of the options presented below:
1. Bitmain Antminer S5
The S5 is a rather old ASIC miner but still one of the best options when considering its ROI and efficiency. Unlike the newer options (e.g. S7, S9), the S5 operates on low power output (115 volts) and draws an average of 560 in watt power. This low energy requirements make it a great miner for beginners or investors who’d see mining as a hobby instead of a profession. At the time of this writing, a second-hard Bitmain Antminer S5 is priced between $190 and $299. You can also order a new S5 from China at a price of $413.
2. Antminer T9
The Antminer T9 is another older ASIC model that is well worth it even by today’s standards. Released in August 2017, T9 is often compared with more expensive and recent models (e.g. S9) in terms of efficiency and performance and even outperforms some due to improvements in the quality of its chip, which improve the hardware’s stability. However, when it comes to its profitability, the T9 is less profitable than newer models, and thus better for small-scale mining operations. When it comes to this miner, used T9 models start at a modest price of $100.
3. Antminer S9
From all the low-cost options of ASIC miners, the S9 is probably the best one when it comes to profitability. A little more than a year ago, the Beijing-based company released this budget option to the public, to celebrate the success of its past editions. To this day, the miner is extremely popular and low-priced compared to older models (starting from $350). It processes the SHA-256 algorithm (for BTC and BCH), draws approximately 1280W, and operates at 16 terahashes per second (at 80 J/TH).
You should now have a better idea of the Bitcoin mining scene in 2020, and what you will need to get started. After getting a better idea of the profit potential and different options of different mining hardware options, you should now be able to make an educated decision about your future endeavors. Before you do so, however, we invite you to perform further research and potentially join existing mining-related groups on social media, to find out more about the current outlook of the market.
Keep in mind that mining is risky and the returns are highly volatile. Therefore, and before you invest in mining hardware, make sure you also understand how the cryptocurrency market works.