Is Bitcoin mining profitable in 2021?

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Introduction

Bitcoin is the main cryptocurrency. It has already come a long way from an unknown technology to a form of payment accepted worldwide. This article will look at the history of the first digital coin, whether it has alternatives, how you can mine it, is cloud mining profitable, the highest paying cloud mining, and what prospects await the crypto community soon. 

A brief history of bitcoin

The history of bitcoin begins in 2008 when a developer (or group of developers) under the pseudonym Satoshi Nakamoto published the document “Bitcoin: A Peer-to-Peer Electronic Cash System.” This happened just amid the financial crisis, which, perhaps, was the first driving factor for the project’s development. In the paper, Nakamoto outlined the concept of a decentralized digital currency without a single administrator but with a public ledger of transactions that each participant stores on their computer.

Bitcoin’s first spectacular take-off occurred in 2013. In early April, the rate soared to $220 but almost immediately fell to $70. By October, the coin was trading at $123, and by December, at $1156. The next rise in prices happened in 2017. At the beginning of the year, the coin fluctuated at the level of $1000, and in December, it already reached a maximum of $20,000. Of course, such an event made bitcoin a real mainstream.

For another two years, the price either fell or did not change. June 2019 saw a surge in prices and trading volume. The price exceeded $10,000, reviving hopes for a new rally. But by December, the rate had dropped to $7100. The price of bitcoin began to rise again when the economy of traditional finance began to decline due to the COVID-19 pandemic actively. By November, BTC was trading at $18,300. The ongoing institutional interest in cryptocurrency has pushed the price up even more. In January 2021, bitcoin broke its previous price record and exceeded the $40,000 mark, and in mid-April – $64,800. As of October 2021, this price remains at its maximum; the exchange rate has fallen and has been holding at the level of 35-45 thousand dollars for a long time.

What are the main factors driving Bitcoin’s growth?

Speaking about the impact on the price, it is worth mentioning that the GDP, the country’s central bank, or consumer price indices cannot influence the price of Bitcoin and altcoins. Therefore, in many countries, regulators intervene in the cryptocurrency market – to somehow control the price of the crypto, then at least the activities of the companies that work with it.

Technical factors

Changes almost always influence the rate of cryptocurrencies in the technologies of a particular coin, mining processes, halving, and hard forks. For example, when a hard fork (splitting the leading network) of the blockchain into two is announced, people start buying these coins. Their goal is to get a new cryptocurrency, which will result from the division of the network.

Therefore, the news of a hard fork almost always raises the demand for this cryptocurrency. After receiving a freebie, investors often sell both assets, fixing profits. Well, since we are talking about news, almost any price fluctuation depends on them.

News background

Cryptocurrency prices are most influenced by industry news. Since digital assets are mainly used as a speculation tool, the price is supported by good news. A striking example of the dependence of the rate of cryptocurrencies on the news is the story of Elon Musk, who, with his tweets, raised and lowered the price of Dogecoin and Bitcoin.

Any news that threatens the stability and well-being of the cryptocurrency community can change the psychology of investors. The most unstable (on the stock exchange, they are called hamsters) start selling their assets, fearing to go into a big minus.

And news that contributes to the expansion of the cryptocurrency market, areas of application of the blockchain, the legalization of Bitcoin as a means of payment will provoke the purchase of assets by investors and an increase in demand, respectively, and the price.

Demand on trading exchanges

The demand on the stock exchange acts as a factor arising from the news background. However, the rise in the price of a cryptocurrency may not always start with the news. After the growth of the Bitcoin rate by 30-40%, the news will appear by itself and strengthen one factor by another. The price of assets that work exclusively as an instrument of speculation is nothing more than the supply and demand ratio on exchanges.

There are “whales” in the cryptocurrency market – millionaires and billionaires who are ready to quietly buy vast amounts of cryptocurrencies and sell them at a higher price. There is a theory that these industry giants periodically negotiate with each other. As a result, it joint forces are easier to influence the course.

The course’s natural or artificial growth of the course is called “pump.” The reverse process is “dump.” Investor communities often band together to pump up some small coins. They increase the price of the asset on their own, creating hype on this. When hamsters start buying this coin or token, those who pump the coin can safely leave the game with a profit (profit).

What do you need for Bitcoin mining?

Since any government organization does not regulate cryptocurrency, everyone can engage in Bitcoin mining. But if not long ago it was possible to mine new coins at home with the help of a computer and a powerful video card, then today you cannot find anything in this way. Moreover, according to many experienced miners, only cloud mining sites allow making money on Bitcoin mining. And even Asics are no longer profitable since the income does not exceed the cost of purchasing equipment and electricity.

Home mining will not be able to compete with large players. The mining of crypto coins has become a real profession in which there is no place for the usual stationary computers and their owners.

Mining bitcoin on a home PC or laptop in 2021 has become truly ineffective. This is because blockchain technology has grown in complexity. For example, how to decrypt blockchains at home when the equipment cannot cope with such tasks? Moreover, such mining requires huge investments (purchase of equipment and its depreciation, electricity bills), so it often brings nothing but losses.

Every day bitcoin mining becomes more complicated, its cost is growing. Initially, there were a lot of bitcoins, but the currency itself was worth nothing. Now the price of coins is calculated in thousands of dollars, and every bitcoin found is a real trophy for its miner.

And miners themselves have become more resourceful and technologically savvy.

Is cloud mining profitable?

The most relevant option for mining bitcoins in 2021 is cloud mining. Is cloud bitcoin mining profitable? It provides maximum profitability without requiring the user to participate in the technical part of the process. All you need to do is buy a cloud mining contract, top up your balance and wait until you can withdraw the funds mined in the cloud.

Bitcoin cloud mining is the mining of coins on rented special equipment. This type of mining is objectively considered the most promising. With the automatic mining of bitcoins in the cloud, the miner does not buy expensive equipment, install it, and feel discomfort from the noise of operating equipment.

Also, there is no need to control the correct cooling and monitor the operation of the bitcoin farm around the clock. The organizing company takes care of the uninterrupted supply of computers with electricity and the safety of the equipment. You will not worry about how profitable cloud mining is.

In short, the user does not need mine directly but only invests in the process. And can cloud mining be profitable? Sure, the more money he invests in the beginning, the more profit he will get in the future.

If we talk about the forecasts of the cryptocurrency market in 2021, we need to highlight the following significant trends that will become the main drivers of the growth of BTC and altcoins. The key and foremost thing is the influx of companies from the S&P 500 into the crypto market. In 2020, we saw several large purchases of bitcoin, which led to fluctuations in its rate. This trend will continue as Bitcoin is the most profitable investment today. This means that the cryptocurrency market capitalization will continue to grow. And cloud mining will still be profitable.

Ethereum (ETH)

The second most popular digital currency among users is Ethereum or Ether. It was created in 2015 by Vitaly Buterin, a Canadian programmer with Russian roots.

Ether occupies 18% of the cryptocurrency market. Its cost is 17 times less than that of Bitcoin. According to analysts from the American bank JPMorgan, there are three reasons why Ethereum is superior to BTC:

  1. stable liquidity;
  2. high transaction speed;
  3. less dependence on the derivatives market.

Ethereum’s creators are working to develop it. Recently, the popularity of decentralized financial services based on the Ethereum blockchain has increased, indicating further prospects for the growth of the ETH price.

Litecoin (LTC)

Litecoin was created in 2011 by former Google engineer Charles Lee. LTC is seen as a bargaining chip for bitcoin. Today Litecoin holds 2% of the cryptocurrency market.

Benefits of Litecoin:

  1. small transaction fee;
  2. high speed of transfers;
  3. supported by the PayPal payment system.

Currently, the creators are improving privacy features, which will allow making public and private transactions. If they implement their development, then LTC will become the only cryptocurrency that supports private transfers.

Binance Coin (BNB)

Binance appeared in 2017. It was created for trading and paying commissions on the eponymous online service for exchanging digital money. But the coin quickly gained users’ trust and became a full-fledged payment instrument for purchasing goods and services. Since the beginning of 2021, BNB quotes have skyrocketed.

Conclusion

Cryptocurrencies are one of the most profitable asset types that you can invest in. Bitcoin is one of the most popular and reliable ones. Is cloud mining profitable? Yes, it’s the best way to receive a stable income and reduce the risks of investing in cryptocurrencies.



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