Blockchain technology is already starting to have a major impact on the business world, creating entirely new industries. Bitcoin mining is quite possibly the most interesting and profitable of these new opportunities. Whether you’re an entrepreneur on a budget or have a large supply of capital to spend on a mining operation, here are some important things to consider before starting a mining operation and how you can benefit from a successful mining operation.
Things to Consider Before Starting
Legal Risks
One of the first steps to consider is whether or not bitcoin mining is legal where you live. In some countries, bitcoin mining operations have been shut down entirely. Before you formulate a strategy, you should get a better understanding of some of the legal risks and the regulatory outlooks of starting a mining operation in your country.
Hardware Investment
Another important factor to consider is the barrier to entry for mining. Keep in mind that choosing between CPUs, GPUs, or ASICs isn’t only based on how much money you have to spend but is often dictated by what types of mining are allowed by the projects themselves. For instance, BTC allows for ASIC hardware, but BCG does not. More cryptocurrencies are beginning to utilize ASIC-resistant algorithms. These new hashing algorithms take away the advantages of ASICs and make GPUs a more economical choice. This can be a good thing for entry-level miners who don’t want to invest $1,000 USD to buy mining equipment. However, it also makes it more difficult for entrepreneurs with a lot of money to be able to mine at scale.
Picking the Best Mineable Cryptos
Consensus Algorithm Trends
One of the biggest things to consider is what consensus algorithm of the cryptocurrency you are interested in mining plans to use in the future. Of course, if a project is currently using Proof-of-Stake, its cryptocurrency is non-mineable. Also, more Proof-of-Work projects are moving towards PoS or hybrid consensus algorithms. It’s important to make sure that you are aware of these changes. Just because a given crypto is currently mineable doesn’t mean that it will remain that way forever.
