Should you mine bitcoins in 2022?
People have been making money mining bitcoins for a few years now, and at first glance, it doesn’t look like much will change in 2022. After all, people will still be demanding a constant supply of bitcoins into the market over that period, and the blockchain technology powering the bitcoin network is unlikely to be obsolete by then.
However, as we descend into further years into the future, it will become increasingly difficult to turn a profit mining bitcoins. The first reason it will become more unprofitable is how cheaper it is to mine other cryptocurrencies such as litecoin, peercoin, dogecoin, and darkcoin.
In 2014, bitcoin mining became dominated by multi-million-dollar ASIC data centres constructed at a high cost. Even the least powerful devices running in these facilities run around the clock to ensure an adequate hash rate for profitability.
However, it is unlikely that many of these facilities will remain open for more than a few years at the most. This is because of how difficult it has become to make money mining bitcoins and fears that bitcoin transactions are not entirely anonymous.
For example, one Reddit user recently outlined how he had mined about 50 bitcoins using an ASIC device named Gridseed, which can be obtained for about $300. Meanwhile, those same chips can mine scrypt and X11 coins and even do so at a lower cost than the electricity required to power an ASIC device for bitcoin mining. Check here why bitcoin price is so volatile.
And as more and more people begin to see that it is unprofitable to keep open a facility dedicated solely to mining bitcoins, a mass exodus will be seen from the market as individual miners look for more cost-effective ways to obtain cryptocurrencies.
A second reason why it will be increasingly difficult to make money mining bitcoins is the increasing difficulty level of the blockchain that they are operating on and reduced block reward payouts.
By 2022, there is a good chance that the six blocks that are released to the bitcoin mining pool every ten minutes will be reduced to 3. This is because the bitcoin network automatically adjusts itself.
Therefore, if this change does occur, it would be three times more difficult for an individual miner operating their ASIC device to turn a profit. The only way they would be able to maintain profitability in this future environment is by pooling their resources with others in the network, defeating the object of bitcoin mining by removing its individualistic nature.
At present, many bitcoin pro miners are already considering this possibility and also looking for other ways to make money in the future. One profitable alternative is cloud mining, where an individual purchases a contract from a bitcoin mining pool and pays for the upkeep of the equipment needed to keep it running. However, this process is less than perfect due to such factors as over-selling and hardware failure.
Meanwhile, some companies have even begun turning away from cloud mining and setting up their physical bitcoin mining facilities. One such company is Mega Big Power, which has recently opened a new facility in Missoula, Montana. This new operation will consist of 11 PH/s of dedicated ASIC machines, all housed within a 65,000 square-foot warehouse.
So, does this mean that the days of bitcoin mining as we know it are already over? And if so, what effect would this have on the future of cryptocurrencies in general?
One thing’s for sure: If bitcoin mining continues to be a viable way for individuals and companies to make money in the future, then it will need to change. The current model of running many ASIC devices in a remote location isn’t profitable enough. The network’s rewards released every ten minutes can no longer support such activity. If this remains the case, then big business will dominate bitcoin mining, and the essence of blockchain technology will be lost forever.