Many people say that Bitcoin miners are earning tremendous amounts by just solving the set of transactions up to one megabyte, known as a Bitcoin block. But is it real that they are earning huge profits from bitcoin mining, or do they remain with the bit of profit after deducting the mining expenses? So this reading will guide you on whether Bitcoin mining will be profitable in 2022 or is it just a waste of time for beginners? Here you can check why people want cryptocurrencies.
What is Bitcoin mining?
Many Bitcoins occur on the blockchain network simultaneously. On average, every transaction takes ten minutes to broadcast on the blockchain network because many miners validate it on the platform. So in simple words, mining is the audit of the bitcoin transactions by contributing the resources to prevent fraud because there is no backend support to the users.
The person who contributes to the blockchain network by auditing the bitcoin transactions by their skills, time, and efforts is known as bitcoin miners. A bitcoin miner is an expert in solving mathematical puzzles and has advanced practical knowledge of the different programming languages.
What is a mining reward?
As we see, in centralized institutes such as banks and other companies or financial institutions, the staff who work to manage and control services get paid in salary by the owner or founder of the institute. But bitcoin is a decentralized system meaning no CEO or manager will pay the miners. Hence the rewarding system works for these miners to motivate them to contribute more to the network, so the working of bitcoin cannot stop.
These people have to solve the set of transactions up to one megabyte and send it in a pool known as a bitcoin block. Then the block is broadcasted to other nodes (miner’s computers) to validate, and when the block gets published on the blockchain platform, the miner gets rewarded by six point two five (6.25 BTC) bitcoins that are worth up to 255965.00 dollars at the current time.
Profit from the fees
If you are a regular bitcoin user, you are aware of the bitcoin fees. If you are not a bitcoin user, then bitcoin transaction fees are charged by the exchange that goes to miners for encouragement as a half-percentage goes to the exchange you are using. If you are using a direct bitcoin wallet, you do not need to pay the fees to the bitcoin exchange, and a decentralized software wallet will also give you the option to customize the bitcoin transaction fees. For example:- Suppose you are sending one bitcoin to another wallet. When you paste the public key in your sending and enter the amount of bitcoin you want to send, recommended transactional fees will automatically appear. So the bitcoin miners also make dollars from the transactional fees.
Is Bitcoin mining profitable in 2022?
If you are thinking of starting bitcoin mining in India, you will suffer a loss because of the new tax regulation on cryptocurrency. You have to give thirty percent tax on your profit, one percent TDS per transaction, and if you are going through the bitcoin exchange, then fees will be deducted through the exchange. Before starting bitcoin mining, you have to consult the CA or tax advisor near you; otherwise, you will put your money in the dustbin. You must check the tax guidelines on cryptocurrency in your state or city.
Expenses for measuring the profit
- You need a particular computer made for Bitcoin mining because you cannot use a regular computer for mining. So this high processor computer will cost you around $1000.
- You need a bitcoin mining hardware machine separately to lessen your involvement in the mining process. It is recommended to every beginner because the competition on the blockchain network is tremendous. If you take Antminer S19 with 95 hash power, you have to spend 10,000 dollars to 15,000 dollars, and there are more mining machines with high hash rates at a high price.
- You have to calculate the electricity every month, and your electricity bitcoin would be very high according to the mining process. You have to turn on your computer 24/7 days because mining is not a game of six to seven hours. You have to calculate the rate of each unit you are spending to calculate the overall mining process cost in a month.
- It would be best to have additional equipment like a graphic card and cooling fans to cool down your mining hardware machine and computer; otherwise, your machine and computer will not work for an extended period.
- You have to maintain all the mining resources in the future because many things would be in repair, and you have to incur the cost for maintenance.
So if you want to calculate the profit from the mining, then deduct all the measurable expenses and tax from the reward you will earn and get the estimated profit.