Why is cryptocurrency mining important and why don’t all forms of electronic money require it? We can make a quick comparison with the use of credit cards in a traditional electronic money system. There, every payment must be verified and recorded by a credit card company (such as MasterCard or Visa). These centralized systems record the entire cash flow of the current banking system, so these records become vulnerable to attacks. Bitcoin and other cryptocurrencies, on the other hand, do not have a centralized organization that validates transactions. Miners do this work–and in exchange, they get money!
What makes mining profitable?
The success of a cryptocurrency mining operation depends on many factors. The exchange rate for the cryptocurrency and the complexity of mining it are two of the most important of them. For instance, after its massive downturn to nearly 6000 USD/BTC, mining BTC in Europe would probably result in a loss. This is because it would be cheaper to buy the coins from a market and save them in a wallet.
We will not go into too many technical details about cryptocurrency mining, but we need to emphasize one. This fact is that the amount of most digital coins available for mining is limited, and the difficulty to mine them increases gradually as they are issued. This means that when a cryptocurrency is new, mining is relatively fast and the work of a mere computer microprocessor in cooperation with a specialized program is enough to get coins. After some time, regular computers are not enough for mining. At this point, specialized hardware and software are needed in order to get real returns. You could still theoretically run a regular computer for mining, but the cost of the energy required would be higher than the crypto returns.
Is cryptocurrency mining still worth it?
The answer to this question depends entirely on the energy costs you can obtain and the computing power, time and budget you have access to. As we mentioned before, mining Bitcoin at home with a regular computer is feasible, but not economically viable. For example, a top-of-the-line computer with six graphic cards worth over $10,000 could mine one BTC in a hundred thousand days or about 274 years. The cost of the energy needed for running this computer for that period of time would outweigh the value of the mined BTC.
On the other hand, there are other altcoins whose mining requires less computing power and therefore time and energy. These alt coins can be an attractive proposition for at-home miners. Like in any other business, a cost-benefit analysis is essential to determine the feasibility of any mining project.