Bitcoin Mining Difficulty: Its Impact on Small Scale Bitcoin Mining Businesses
After investors re-assessed their views about bitcoin (BTC) in 2020, they started investing on the digital coin and triggered a phenomenal BTC trading boom. Up to this date the growth trend continues. As a result, the boom has pushed bitcoin mining difficulty to a record high. That being the case, small scale, often home-based BTC mining businesses, are unable to realize decent profits due to the current level of bitcoin mining difficulty.
Understanding Bitcoin Mining Difficulty
As of January 31, 2021, public data indicates that the mining difficulty of bitcoin now stands at approximately 20,823,531,150,111 (20.82T). Yet what does mining difficulty mean?
Bitcoin mining difficulty indicates the level of complication involved in obtaining one (1) unit of BTC as reward, because finding a block of hash to solve on any given day gets harder to achieve.
Bitcoin mining today has become a competitive business that mining difficulty level has reached a record high. The higher the mining difficulty, the lower the hash rate. THIS means slower speed by which calculations can be completed by miners across the bitcoin network.
The hash rate is an important metric because it indicates the average speed by which miners complete a block to earn a reward. If mining difficulty is at a low level, the hash rate is conversely high. It denotes that individual mining machines do not encounter difficulty in finding a new block to complete. The higher the hash rate, the higher the opportunity to earn another reward.
As it is, bitcoin mining difficulty has reached an all-time high, while the corresponding hash rate is averaging at 171 million EH per second. EH stands for extra hashes, to which 1 EH is equivalent to 1 quintillion hashes. BTC miners therefore are currently computing at a rate of 171 quintillion hashes per second. After all, before miners are able to solve problems and complete a block, their mining machine/s have to make millions of conjectures in every passing second.
Yet despite the present high level of difficulty, bitcoin mining is still regarded as a hot business investment. The current trend in bitcoin prices ranges between $30,000 and $40,000. As of this writing, bitcoin trading closed at a price of $40,406.70.
The average bitcoin reward that miners receive today has gone down to 6.25 per block from a previous 12.50 per block. This all the more underscores the importance of using efficient bitcoin mining machines. Mainly because once the cost of electricity is factored in, the profits realized might not meet expectations.
Many investors are still not too comfortable with the idea of using their passive income to buy additional bitcoin assets, due to the inherent volatility of cryptocurrency prices. Instead, they are looking into the possibility of investing in bitcoin mining for themselves. After learning about the increasing level of mining difficulty and the growing complexity of the hashes, many are convinced that the more profitable approach to bitcoin mining is by taking up offers of Mining as a Service (MaaS).
What is Mining as a Service (MaaS)?
Mining as a Service is a mining platform that empowers those looking to engage or invest in bitcoin mining on a commercial scale. Through the use of the service provider’s resources, they can purchase bitcoin miners. Buying a bitcoin miner or even a team of bitcoin mining machines, eliminates the need to maintain a thermally-regulated facility and at the same time, pay for high costs of electricity and maintenance.
Elevate Group, for one is a MaaS service provider that commits to working with customers without any termination period. An agreement can last up to 3 years or more, depending on the life of the bitcoin miner purchased. In exchange for the arrangement, Elevate Group simply collects 20% of the mining profits earned by every bitcoin miner servicing a customer.