Bitcoin mining started as a lucrative hobby for early adopters, who could earn 50 BTC every ten minutes while mining from the comfort of their homes. If you successfully mined just one Bitcoin block and kept it since 2010, you would have had $450,000 in your wallet by 2020. Suppose you are eager to learn and earn a semi-passive income from bitcoin mining. In that case, Earnity’s industry experts, Domenic Carosa and Dan Schatt, believe you must first understand a few fundamentals before deciding whether or not you can profit from bitcoin mining.
Block Reward in Bitcoin
Today miners receive 6.25 bitcoins, but after the halving in 2024, this number will decrease to 3.125. Then, after the halving, the process repeats every 10 minutes for each mining machine on the network. Additionally, the mining difficulty adjusts every 2,016 blocks (14 days) to ensure that one device can solve the puzzle in 10 minutes on average.
How do Bitcoin miners figure out how much they make?
You probably heard the sensationalized stories about how much energy Bitcoin mining consumes. Regardless of whether the media exaggerates the impact, the underlying cost of mining is the energy consumed. Thus, if you want your bitcoin mining venture to be profitable, your mining revenue must exceed those costs and the initial investment in mining hardware.
Revenue from Mining
Look at the miners as a decentralized version of PayPal in that they ensure that all transactions are reflected in records accurately while earning a small amount of money to run the system. Effectively, Bitcoin miners make money by collecting the block reward and the fees that bitcoin users pay the miners for safely and securely recording their bitcoin transactions on the blockchain.
How about transaction costs?
The transaction fees that Bitcoiners must pay when transferring BTC to one another are the second source of revenue for Bitcoin miners. Domenic Carosa and Dan Schatt from Earnity believe that is the allure of Bitcoin. Every transaction reflects in records in an immutable blockchain, replicated on every mining machine. Subsequently, Bitcoin does not rely on a central bank to keep records. Instead, the miners keep the records and a portion of the transaction fees.