What determines the profitability of mining bitcoins and altcoins?

Hello, I'm just starting to discover the “world” of cryptocurrencies, namely the sphere of mining. Tell me, what does mining income depend on and how can you increase its efficiency? Ruslan Galiullin, Kazan

A person who first gets acquainted with the concept of "mining" and delves into the essence of this activity is rightly interested in the usefulness of such an activity. He is interested in how the blockchain technology works, what is the essence of earnings, what profit can be obtained from the extraction of cryptocurrencies, as well as what nuances determine the income and whether it is worth organizing such a business.

Despite the simplicity of such questions, it is impossible to give a definite answer to them. In order to determine as accurately as possible the numbers of possible earnings through the Internet, it is necessary to take into account many parameters and correctly interpret their influence on the final result.

Some of the factors are due to the power of the equipment and the availability of special software needed for work, a certain percentage of the cryptocurrency option chosen for mining. You can read about bitcoin mining in the article by the link, which describes in detail how to mine bitcoins and what equipment and software will be required for this.

The rest of the circumstances depend on the nuances associated with other users.

Let us consider in more detail the main aspects that provide for the profitability of the production of electronic currencies, the formula by which this profitability is calculated, as well as the possibility of increasing it.

1. What the miner's income depends on - the main points

First of all, when mining, you need to take into account such moments:

- hashrate(hashrate) - the computing power of the PC used and the capabilities that it can really show. This also includes special programs designed for mining. When these indicators do not quite correspond to the present, then even a small improvement (a more advanced video card or processor) can increase productivity by 22-38%. This is a significant percentage of production growth;

Attention! Completely identical equipment can mine cryptocurrency in different ways. The mining algorithm is of great importance!

- network complexity - This is partly an abstract concept, implying the total power of all devices that are currently mining a certain cryptocurrency. If the network hashrate is small, then the chances of a quick, efficient mining of cryptocurrencies increase;

- reward(block reward). This means the number of coins that the miner receives when his program detects and processes a block of a cryptocurrency. For electronic money, the principle of operation is similar - for verifying the correctness of the code chain in the block, a certain percentage is put to the validator (verifier). However, over time, such a fee always decreases. For example, for controlling a block of one bitcoin, the reward is halved after 4 years;

- exchange value (bid, offer) is the price of cryptocurrency coins on exchange platforms. Most often, altcoins (alternative virtual currency) on trading platforms are sold / bought for BTC. Then, the received bitcoins can be easily converted into euros, rubles or dollars through a wallet. We also wrote about how to create a Bitcoin wallet in a separate article.

There are still a huge number of factors, however, it is necessary to take into account primarily the nuances presented above.

2. How mining income is calculated - the universal formula

Everyone who is engaged in mining or is considering the possibility of earning bitcoins can fairly accurately predict, or rather, calculate their profit. There is a formula that allows you to determine the average user reward. Everything here is determined by the coin of the extracted virtual currency and the processing power of the equipment.

The formula is as follows:

Reward (one MH / s per day)= block reward x 20.1166 (correction constant) / price (bid) x complexity.

This principle of calculation is valid for all cryptocurrency mining algorithms. The specificity of a certain altcoin is due solely to the size of the reward for the block, as well as the actual difficulty of its extraction.

You also need to consider a different hash rate for different equipment. It depends on the algorithm used.

The block reward usually varies infrequently and for a long time is a constant. The current complexity and exchange value can change very quickly throughout the day.

Mining modern programs able to track online the price of cryptocurrency and the difficulty of mining its coins. Some applications can automatically switch. They choose the mining of the most profitable altcoin, which is listed in a special list by the cryptocurrency mining user.

We also recommend watching a video about mining BTC, which programs and equipment are used:

3. How to increase the efficiency of mining - the main ways

Cryptocurrency mining efficiency (not profitability!) the user can increase in several ways:

maximize the equipment / own computer, replacing the processor and video card in it with the latest, high-performance models;
pick up a coin that shows stable price growth;
Use only the latest software.

In addition, you can create additional modules from video cards, but this already refers to the topic of creating cryptocurrency farms.

4. Conclusion

Cryptocurrency mining by users is now very relevant. Anyone can earn good amounts thanks to well-organized mining. There are no particular difficulties here, especially since the virtual market is saturated with various digital currencies. It is only necessary to competently begin this activity, and there will certainly be profit.

A significant minus of such earnings is a considerable investment, but as you know, the more investments, the greater the return. Therefore, for example, earning through bitcoin faucets is not comparable with cryptocurrency mining.

We hope that Rich Pro magazine was able to give you all the answers to your questions. We wish you good luck and success in all your endeavors!