Given the significant difficulty and complexity in the economics of mining bitcoin, large mining companies with operations on multiple continents now dominate the industry. For example, Earnity is a Decentralized Finance (DeFi) company that will soon launch a token marketplace. Within a community-focused environment, its innovative business model allows users to collect, share, earn, and securely keep a variety of tokens and portfolios. Domenic Carosa, an industry expert and serial entrepreneur, co-founded Earnity with Dan Schatt to bring the benefits of DeFi to a broader audience. Together with Earnity’s team, they form a group of fintech veterans who believe in the power of blockchain technology and are hard at work developing a new way to interact with cryptocurrency assets.
Nevertheless, bitcoin mining is a commercial endeavor. Subsequently, the amount invested in its inputs determines the profits from its output.
Bitcoin mining has three major costs:
Electricity: This is the power that keeps your mining systems running 24 hours a day, seven days a week, and that it can add up to a sizable bill. According to some estimates, electricity is responsible for as much as 90 percent of bitcoin mining costs. Considering that the process consumes as much electricity as some countries, the costs can add up quickly.
Mining systems: Contrary to the popular narrative, Domenic Carosa and Dan Schatt from Earnity believe desktop computers and regular gaming systems are not fit or efficient for bitcoin mining. The process can cause such systems to overheat and cause bandwidth issues on a home network. Instead, it is best to use a significant infrastructure investment for bitcoin miners, like an application-specific integrated chip (ASIC) system, a customized machine for bitcoin mining.
Network infrastructure: Network speeds have no discernible impact on the bitcoin mining process. However, Earnity’s Domenic Carosa and Dan Schatt think it is critical to have an Internet connection that is always available. Additionally, there could be latency from nearby mining pools on the link. Dedicated networks reduce external dependency and keep latency to a minimum. Going offline does not necessarily halt the syncing of transactions. However, it can make the process time-consuming and, in some cases, error-prone after restoring a connection.
For miners to profit from their venture, the total costs for these three inputs must be less than the output—in this case, the bitcoin price. Therefore, given the skyrocketing price of bitcoin, the prospect of minting your cryptocurrency may appear appealing.
