Best Crypto Mining Platforms Canada 2021

Cryptocurrencies have ushered in the gold rush of the digital age. Many have experienced this rush by merely buying crypto, but what are the prospects for crypto mining profitability?

Beyond potential earning capability, crypto mining as a concept is foundational to understanding the underlying value of the digital asset. Here at Bitreviews Canada we will bring you up to speed with all the must-knows of crypto mining 2021. If you would like to get a more basic understanding of cryptocurrencies, head to our crypto reviews.

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A Crypto Revolution

Cryptocurrencies are bringing about a financial revolution. Bitcoin, for example, enables the private, peer-to-peer, borderless, trust-less transfer of value, this transaction is then stored on a decentralised, distributed ledger that is maintained by millions across the world. It is often likened to prime digital real estate where you can build your wealth, without fear of having its value debased by central bankers or the need to trust third parties. The promise and power of this technology and its increasing adoption and demand, is partly why we see the prices at, what currently seems like, astronomical prices. The other force driving price is supply. The genius of Bitcoin lies in its scarcity.

The mathematics underlying Bitcoin ensures the digital asset will never exceed 21 million Bitcoin, newcomers should note however that each Bitcoin is divisible to 100 million Satoshis, think of it like Bitcoin ‘cents’. This designed scarcity is further constrained by the fact that much, by some estimates 20%, of the current Bitcoin supply is lost forever due to users losing their private keys or cold storage devices.

Consider, also, that the extreme short term volatility and long term hyper growth urges users to hold on to these currencies for extended periods of time, further constraining supply. Bitcoin is the highest profile cryptocurrency, but the majority of alternatives share this property of artificial scarcity which constrains supply. The second-largest cryptocurrency by market capitalization, Ethereum, is an example which does not have a hard cap on total supply. Both of these cryptocurrencies will need to be safely stored, read through our Bitcoin wallets page to learn more.

What Is Cryptocurrency Mining?

So, what is crypto mining? Crypto ‘mining’ was named in reference to traditional mining practices which systematically extracts finite resources from the Earth through labour-intensive processes. Similarly, crypto mining can be understood as the labour intensive process by which finite Bitcoin is extracted from the Bitcoin network. This name is remarkably clever as it provides a very familiar visual and way to conceptualize the abstract and novel notion of generating a resource by running algorithms on computers. Subconsciously, the term ‘mining’ invites us to associate the product with rare earth minerals and wealth, which is fitting as the Bitcoin community often boasts its superior characteristics as a store of value in the digital age when compared to gold or silver.

Similar to traditional mining, crypto mining is driven by the demand for the resource. When the price of the resource increases due to higher demand, miners are incentivized to scale up operations and competition in the industry tends to increase. As the resource becomes more scarce it generally becomes increasingly difficult to extract that which remains, requiring more or greater technology which again pushes up the price of resources or currencies.

Another common analogy in the industry is comparing the crypto revolution to a gold rush. Periods in history saw mass migrations of often unskilled people from all over the world to foreign lands over with the discovery of gold where they had to learn new trades and labour over the extraction of a finite resource. So too, the prospect of crypto mining profitability attracts ambitious people from all over the world to become acquainted with a new set of tools in order to extract value from a finite resource. For fans of the online casino industry, head to our best Bitcoin casino page to find out who tops the competition.

Why Should You Get Into Crypto Mining?

An interesting design characteristic of Bitcoin is that the process by which it is mined becomes increasingly difficult over time resulting in higher operating costs for miners. Prior to Bitcoin’s parabolic growth, there were few transactions to be recorded and people were successfully mining Bitcoin with their computers. Today, the scale has massively increased. You might hear about a crypto mining farm, crypto mining companies and we are even seeing governments such as Pakistan engaged in crypto mining.

Crypto mining profitability is determined by the demand for the crypto relative to circulating supply, the current degree of mining difficulty, the cost of the mining equipment and the operating cost of running your mining rig. Therefore, crypto mining profitability can fluctuate significantly as the aforementioned factors change. It is therefore necessary for miners to constantly do cost-benefit analyses and as themselves: is crypto mining profitable?

When this question can be answered positively, crypto mining can be a fantastic way to generate passive income and it is an amazing way to learn and better understand the dynamics that influence the price of cryptocurrencies. Once you have managed to gather some crypto units, you should read over our crypto trading page to see just how it is done.

How Does Crypto Mining Work?

Crypto mining refers to the competitive computational efforts by actors attempting to solve a complex mathematical puzzle, which enables the winner to record a set of Bitcoin transactions for which they are compensated. The people or institutions engaged in these puzzle-solving operations are referred to as ‘miners’.  As Bitcoin is the dominant cryptocurrency and generally the point of entry for most crypto miners we will discuss its mining mechanism, many cryptos are based on its design, however third generation cryptocurrencies have a different approach.

The technology underlying Bitcoin is called ‘blockchain’. The Bitcoin blockchain refers to the decentralised ledger which records all transactions on the global Bitcoin network. When Bitcoin transactions are made, a certain number of these need to be compiled into a ‘block’ and recorded on the ledger, miners thus compete for the privilege of compiling and recording these transactions. They do so by solving the puzzle of finding an enormous, randomly generated number, the more computing power you have, the more likely you are to solve this puzzle.

The laws of statistical probability make it highly unlikely that the actor with most computing power will get to record the ledger every time. Once a miner is first to successfully solve a puzzle, they get to compile the transactions and add the next block to the blockchain which then updates the decentralised ledger. Mining is thus a means of maintaining the Bitcoin blockchain and ensuring that all the transactions are legitimate i.e. that no double-spending or forgery has occurred. Miners are compensated for this service in two ways, transaction fees and block rewards. Both of these will be awarded as the specific cryptocurrency, if you are a fan of laying down a wager, you can also read over our crypto gambling page.

Transaction fees are an incentive Bitcoin users have to urge miners to add their transaction to the most current block. If you pay a higher fee, a miner is more likely to add your transaction thus your transaction is recorded faster and the miner gets better compensation. Block rewards are the compensation miners earn in Bitcoin, or whichever cryptocurrency, when they add a new block to the blockchain. In the Bitcoin ecosystem, the block reward is halved every 210,000 blocks, which is approximately every four years. When the first Bitcoin blocks were mined, miners received 50 Bitcoin in block rewards which seems absurd at today’s price of Bitcoin, especially when you consider one block is solved every ten minutes.

Is Crypto Mining 2021 Profitable?

In 2009, the dynamics of crypto mining were much different than you would expect today for crypto mining 2021. It required much less computing power, the block rewards were larger measured in Bitcoin, but the dollar value of a Bitcoin was also minimal as there was still very little demand for the asset. The ‘halving’ as it is called, refers to the halving of Bitcoin block rewards every four years.

What started as a 50 BTC block reward in 2009 has decreased to 6.25 BTC as of May 2020, after the third halving, however, the value of BTC increased from $0.0008 to over $47,000 today. So the rewards are now lower in BTC but BTC is higher in dollar value. There are estimated to be over 1 million active Bitcoin miners, with so many miners can you still compete in crypto mining 2021, and what about crypto mining profitability? If you are interested in trading your BTC for another option, read over our cryptocurrency exchanges page.

Large mining companies/farms that run vast mining arrays have made it more difficult for smaller miners to compete. Smaller miners tend to collaborate by joining mining pools thereby increasing their collective computing power. This too comes at a cost as you will have to offer up some of your profits to join such a pool and you will split the profits according to computational contribution. There are many cryptocurrencies you can mine, with the most popular being Bitcoin and Ethereum.

Regardless of what you choose to mine, to be a crypto miner you will need specialised hardware and software, this initial investment can be very costly. Rigs for smaller cryptocurrencies can cost around $3,000 USD while other miners spend well over $10,000 on their personal rigs. You will need a high processing device such as an ASIC (application specific integrated unit) which are essentially Bitcoin generators. Estimates from 2020 indicate that ASICs (e.g. Whatsminer M20S) can generate up to twice the amount of revenue in Bitcoin as graphics cards or GPUs (e.g. AMD RX), equal in cost to ASICs, can generate in Ethereum mining revenue.

This does not paint the full picture, however, as electricity costs are a major factor. GPUs are generally more efficient than ASICs, and therefore your operating costs may be much higher if you choose to mine with ASICs. The accessibility of cheap electricity will be a major factor in assessing crypto mining profitability. China is home to 60% of the Bitcoin’s hash power, meaning 60% of new Bitcoins are mined there. This is enabled by their cheap electricity costs, which is why many major mining companies are located there.

Crypto mining 2021, if you have a large mining rig, you could reasonably expect to mine about one Bitcoin per month. You will have to weigh up your potential monthly income against the initial investment to acquire the rig and the time it will take to learn to use the software, as well as the operational costs, primarily electricity.

Conclusion – The Future of Crypto Mining

The recent bull run in Bitcoin and Ethereum prices have made crypto mining profitability a reality again in 2021. This comes with a few concerns that need to be considered before you make the decision to commit to mining cryptocurrency. Crypto mining 2021 could definitely be profitable if you already have a mining rig and if you have access to low-cost electricity. You may also need to consider the option of joining a mining community in order to increase your chances of receiving the incentive of mining.

During a bull market, the equipment becomes overpriced, new market entrants increase hash power which decreases your odds at successful mining. Furthermore, a correction could suddenly make your operation infeasible. If you have the gear, you have got crypto mining profitability waiting. If you are starting from scratch, please note the risks and initial investment that will need to be made. To get you started in the industry, read over our best cryptocurrency to invest in guide for all the details of the best out there. It’s also a good idea to follow a crypto mining blog, to give you the tips you need to succeed.

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