How Long Does It Take to Mine 1 Bitcoin?
The crypto industry is in full swing at the moment. We’re witnessing an avalanche of Bitcoin traders, buyers, and sellers, from institutional ones looking to capitalize on their investments in the long run to retail traders who treat Bitcoin as a hobby.
Merchants and leading companies have started accepting Bitcoin as a payment method. Software engineers around the world are working on new uses for its underlying technology. To say that Bitcoin is here to stay would be an understatement.
While most Bitcoin-enthusiasts purchase BTC on cryptocurrency exchanges, there’s a new wave of Bitcoin miners who want to generate new Bitcoins themselves. But is mining Bitcoin a profitable business? Or is it a long and tedious process?
Keep reading to find the answers to these questions and more!
Understanding Bitcoin Mining
Before we talk about the duration and expenses of mining Bitcoin, we need to explain the cryptocurrency mining process itself.
Even though mining Bitcoin would be a bit different from mining another cryptocurrency such as Ethereum or Litecoin for example, they’re all done on peer to peer networks using blockchain technology.
The individual who designed and developed this technology was Bitcoin’s founder, Satoshi Nakamoto. He included the full explanation in Bitcoin’s white paper. Nakamoto created blockchain as a digital ledger that stores chained blocks of data (e.g. Bitcoin transactions). It allows the P2P network users to mine the coins and process transactions without a central authority in charge.
This type of decentralization is one of Bitcoin’s main advantages but the lack of third-party monitoring means we can’t be sure whether the mined Bitcoins are genuine or not. This is where we need cryptography to help us.
Proof of Work Consensus Mechanism
The purpose of cryptography is to help miners generate authentic Bitcoins and verify the incoming blockchain transactions.
To digitally generate Bitcoins, miners need to solve a complex mathematical problem by running the data through a hash function. The hash function used by Bitcoin miners is the SHA-256 which outputs a 32-byte hash value.
The miners need to run the data multiple times before they find the right solution. For this purpose, they need proper mining equipment that produces a substantial level of computing power. Once a miner finds the solution, they broadcast it to the whole Bitcoin network and wait for the other miners to verify and accept it.
This is known as the Proof of Work (PoW) consensus mechanism, a system that prevents double-spending. A valid solution means that the transaction has been accepted and placed into the next Bitcoin block.
Mining Reward Halving
The miners’ incentive to spend time and energy searching for the right solution is the mining block reward. For each verified block, miners earn a couple of Bitcoins from the blockchain network and a small transaction fee from the person who made the transaction.
However, as a result of Bitcoin’s hard-capped supply, the mining reward gets cut in half every 210,000 blocks, i.e. roughly every four years - an event known as “the Bitcoin halving”. Nakamoto set an upper limit of 21 million BTC because he wanted to prevent potential inflation scenarios and give the coin scarcity value.
When Bitcoin was launched in 2009, the mining reward was 50 BTC per block. The first halving took place in November 2012, at which point miners started receiving 25 BTC for every block they had mined. Today, the reward stands at 6.25 BTC.
The Speed of Mining BTC
In reality, there’s no such thing as mining 1 BTC only. Instead, the smallest amount of Bitcoin you can mine is one block which currently contains 6.25 BTC. On average, 144 Bitcoin blocks are mined every day.
If you’re lucky enough and happen to have the ideal conditions for mining Bitcoin, you can mine one Bitcoin block in just 10 minutes. Unfortunately, this is not the case for the majority of miners because the amount of time you need to mine one block depends on things like mining difficulty, hash rate, energy consumption, and the mining hardware you’re using.
Mining difficulty is the amount of computational power required to find the hash to the new block. With more and more miners joining the train, the Bitcoin blockchain recalibrates the mining difficulty every two weeks or every 2,016 blocks to ensure that no block can get mined in under 10 minutes.
As a result, even though more than 87% of the whole Bitcoin amount has been mined, experts predict that it would take more than 100 years for the world’s Bitcoin supply to be tapped out.
Hash rate or hash power measures the processing power needed to mine Bitcoin, i.e. how many times per second a miner runs the hash function before he/she finds the solution to the equation. The current Bitcoin hashing power stands at 124 quintillion hashes per second (124 EH/s).
Energy or power consumption is directly linked to the mining hash rate because it calculates the amount of electrical energy a mining device needs to operate. It’s the highest added expense to Bitcoin mining.
When looking for the right Bitcoin mining hardware, check how much Watts it uses to perform its job. The last thing you want is for your electricity bill to be higher than what you were able to earn through Bitcoin mining.
Cryptocurrency Mining Hardware
A couple of years ago, miners could still use GPUs, i.e. Graphic Processing Units, to mine Bitcoin. These are electronic circuits popularly known as graphic cards that are in charge of our computers’ display functions and visuals.
The fact that graphics require a lot of computational power turning these machines into the perfect mining rigs. They’re also inexpensive and capable of performing a couple of cryptographic computations at the same time.
However, you already learned that Bitcoin’s increased popularity has led to an increase in the mining difficulty. As a result, the only cost-effective way to mine Bitcoins today is using Application-Specific Integrated Circuits or ASIC miners for short.
The advantages of ASIC miners over GPUs are numerous, starting with the fact that they have been specially designed to perform the crypto mining function. They are faster, consume less energy, and you can even get them preconfigured. The only drawback is that they’re way more expensive.
At the moment, the ASIC miners with the highest performance are Bitmain Antminer S9, DragonMint T1, and Avalon 6.
From what we discussed so far, solo mining seems to reduce the chances of high mining profitability. The expensive mining hardware, the high electricity costs, mining difficulty, and the enormous competition makes it almost impossible to mine Bitcoin on your own.
That’s why a lot of smaller miners decide to join a Bitcoin mining pool (or mining farm) that allows miners around the world to tune in and pool in their resources to achieve a significantly higher hash rate and reach success with their mining operations.
However, keep in mind that when your mining pool gets the chance to mine a Bitcoin block, the reward is distributed among all members depending on the amount of mining power they all contributed. Plus, these centers tend to charge small pool fees for your “membership”.
Is Mining Bitcoin Still Worth It?
Mining Bitcoin has a significant barrier of entry as running an effective set-up requires use of ASIC devices with a high upfront cost. To stay profitable in the world of Bitcoin mining hardware must also be upgraded at regular intervals to remain competitive.
Hardware energy consumption is also a huge factor as many miners have quit as electricity bills outweigh the value of mined blocks. While in the past anyone with a computer could participate in Bitcoin mining those days have long passed.
For those that do meet the requirements to run a stable mining operation, it is theoretically possible to mine a Bitcoin in as little as 10 minutes. Sadly this is not possible for most as the market is now dominated by large mining organizations.