By now you’ve probably heard about Bitcoin from friends, family or from the news. Despite all of the attention Bitcoin gets, very little people understand what it is or why so many people are now investing in them. This article will help and show you a new way to make money with Bitcoin Mining Rigs without mining.
WHAT IS BITCOIN?
Bitcoin is a payment system, plain and simple. Think about how you can make payments with Visa/Mastercard, Debit card and Paypal, that is what Bitcoin is. Bitcoin is just another payment system where the currency used is called Bitcoins (BTC).
What’s the big deal?
Unlike the traditional payments systems where Visa/Mastercard, Banks or Paypal run the network, control the transactions and hold your money…
Bitcoin’s payment system is run by the community. The whole system is maintained, verified, security by individuals such as yourself. And most importantly you control your own money.
The payment system has permanent records that cannot be tampered, covered up or changed. Once a transaction is made, it is recorded within the system (aka the blockchain) forever.
No authority can hold funds, do chargebacks, or deny you of an account.
Oh and everyone is anonymous within the payment system. No identities are shared other than the wallet address. As an example, think about a home address. You could find any address anywhere around the world but you don’t know anything about the name or who is living there. Same concept with a Bitcoin wallet address.
WHAT IS BITCOIN MINING?
One of the most common analogies that people use for Bitcoin is that it’s like mining gold. Just like the precious metal, there is only a limited amount (there will only ever be 21 million Bitcoins) and the more that you take out, the more difficult and resource intensive it is to find.
Apart from that, Bitcoin actually works quite differently and it’s actually quite genius once you can get your head around it.
Bitcoin mining serves to both add transactions to the blockchain and to release new Bitcoin. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The first participant who solves the puzzle gets to place the next block on the blockchain and claim the rewards.
The rewards incentivize mining and include both the transaction fees (paid to the miner in the form of Bitcoin) as well as the newly released Bitcoin.
WHAT IS A BLOCK REWARD?
The amount of new Bitcoins released with each mined block is called the block reward. The block reward is halved every 210,000 blocks, or roughly every four years. The block reward started at 50 Bitcoins in 2009, and is now 25 bitcoin in 2014. This diminishing block reward will result in a total release of bitcoin that approaches 21 million.
As of today, block rewards provide the vast majority of the incentive for miners. At the time of writing, for the previous 24 hours, transaction fees represented 0.3% of mining revenue.
WHAT IS MINING DIFFICULTY?
How hard is it to mine Bitcoins? Well, that depends on how much effort is being put into mining across the network. Following the protocol laid out in the software, the Bitcoin network automatically adjusts the difficulty of the mining every 2016 blocks, or roughly every two weeks.
It adjusts itself with the aim of keeping the rate of block discovery constant. Thus if more computational power is employed in mining, then the difficulty will adjust upwards to make mining harder. And if computational power is taken off of the network, the opposite happens. The difficulty adjusts downward to make mining easier.
The higher the difficulty level, the less profitable mining is for miners. Thus, the more people mining, the less profitable mining is for each participant. The total payout depends on the price of Bitcoin, the block reward, and the size of the transaction fees, but the more people mining, the smaller the slice of that pie each person gets.
IS IT PROFITABLE TO MINE BITCOIN?
There are many calculators on the web that shows you exactly what the ROI is on any given hash rate when you take into account cost of electricity. Based on how much you spend on your computer hardware or cloud contract and what your electricity cost is, the payback for profitability might be 9-12 months out. So why do miners continue to mine?
Some miners have the economy of scale advantage because they run miners within large warehouses called farms. This gives them a competitive advantage when it comes to cooling, electricity costs, etc…
Some miners believe Bitcoin will reach $1M each some day and ROI will be worth it.
MAKE MONEY WITH BITCOIN MINING RIGS WITHOUT MINING
As mining difficulty increases, some miners are simply not interested in mining anymore. Many did not have the understanding that mining is a rewarding process that requires a lot of patience, dedication and time. They came in for a quick buck only to find that is not always the case.
So many are now trying to get rid of their mining rigs and that is how you can make money thru Arbitrage. Check out this video on the new rebranded YouTube Channel for FlippingIncome called “George’s Tips.”