Nearly everyone’s heard a story about how someone struck it rich mining Bitcoin. But many people wonder whether such opportunities are still around or have already passed. And if they are still around, how profitable are they?
Determining Bitcoin mining profitability isn’t as simple as what it might seem. There are dozens of factors that can play into answering such a question. Potential miners will need to determine their hardware and energy needs. They’ll need to decide whether to go it alone or join a BTC mining pool. And they’ll even need to know a little about Bitcoin block size.
In this article, we’ll look at what we mean by block size. Then, we’ll discuss how it can affect your mining operation’s profitability. So, read on to discover the answers to the questions you’ve been asking about Bitcoin profitability and block size.
Block Size & Number of Transactions
Bitcoin mining is all about creating new blocks on the blockchain. Every one of those blocks of data holds at least one transaction. However, there is a limit to the number of transactions that any single block on the blockchain can contain.
One megabyte. That’s Bitcoin’s current block size limit. And while there have been some on the network who have argued that it needs to be increased for Bitcoin to compete in the long term, 1MB remains the limit currently.
So, what does this mean for Bitcoin mining profitability?
Blocks with more transactions can be more profitable, since each of those transactions carries a fee with it. More fees mean higher fees. And higher fees tends to mean more profit.
This is why some miners and Bitcoin mining pools tend to prioritise the largest blocks.
However, this is not always the case, as the fees for individual transactions can vary widely determined by the user who initiates the transaction.
Block Size & Network Congestion
The main reason that people like Brian Armstrong, the CEO of Coinbase has pushed for increasing Bitcoin’s block size limit is because they see it as the only way to scale Bitcoin. They believe the coin’s future practicality depends on increasing this limit.
However, increasing the block size limit is a complex issue and there is currently no consensus on the best approach.
After all, this limit is the number one reason that the Bitcoin blockchain becomes congested. There are too few blocks for the number of transactions that need to go through simultaneously.
So, what’s the solution?
If the Bitcoin blockchain eventually does see a block size limit increase, it could have a major impact on profitability. Increased space within each block would boost demand. In turn, this would drive transaction fees up. And all of this could ultimately benefit miners and mining pools.
Unfortunately, there are no current actionable plans to make this happen. So, how can miners stay profitable in the near term while preparing for any future increases to the block size limit? By joining a BTC mining pool like PEGA Pool.
How Joining a Mining Pool Can Help
Miners can potentially increase their profitability by joining a Bitcoin pool. In a mining pool, they share the efforts and rewards while reducing any risk.
Pools for mining allow individual miners to aim for those larger blocks that require greater resources to mine, but which come with higher earnings. They also give miners the ability to stay above the water even when network congestion threatens to limit their opportunities.
By joining the right mining pool, miners may potentially earn more – but they can also set themselves up for future block size limit increases.