What is a Bitcoin Generator?Bitcoin generator is a computer specifically designed to solve problems according to the proof of work algorithm. Presently, highly specialized chips called ASICs, Application Specific Integrated Circuits, are used as Bitcoin generators.
Bitcoin Generator: How it WorksWhere do bitcoins come from? This question might have crossed your mind without any related answer to put your mind at rest. With paper money, a government body is known to make a decision as to when to print and distribute money. Unlike Bitcoin which doesn't have a central government that controls its production and distribution. Miners use special software to solve math problems and are rewarded with a certain number of bitcoins in exchange. This provides an instant and smart way to issue the currency and also creates an incentive for more people to generate.
"Bitcoin Generator: Is it Profitable in 2017?"The simple answer would be "It relies on the amount you're willing to spend". Every individual asking himself this will find a somewhat different solution since Bitcoin generator productivity relies upon a wide range of components. In order to find out its profitability for different factors “mining profitability calculators” were invented. These calculators consider the different parameters, for example, power cost, the cost of your hardware and other variables and will give you an estimate of your projected profit. Before I give you a short case of how this is calculated we should ensure you know about the different variables:
Bitcoin Generator: Terms you should be familiar with
- Bitcoins per Block – Each time a mathematical problem is solved, a constant amount of Bitcoins are generated. The number of Bitcoins generated per block starts at 50 and is halved every 210,000 blocks (about four years). The current number of Bitcoins awarded per block is 12.5. The last block halving occurred on July 2016 and the next one will be in 2020.
- Electricity Rate – Operating this software consumes a lot of electricity. You’ll need to find out your electricity rate in order to calculate profitability. This can usually be found on your monthly electricity bill.
- Pool fees – In order to generate, you’ll need to join a mining pool. A mining pool is simply a group of miners that join together in order to generate Bitcoin more effectively. The platform that brings them together is called a "mining pool" and it deducts some sort of a fee in order to maintain its operations. Once the pool manages to mine Bitcoins the profits are divided between the pool members depending on how much work each miner has done (i.e. their miner’s hash rate).
- Hash Rate – A Hash is the mathematical problem the generator’s computer needs to solve. The Hash Rate is simply the rate at which these problems are being solved. The more miners that join this network, the higher the network Hash Rate is. The Hash Rate can also refer to your generator’s performance. Today, miners (those super powerful computers talked about in the video) come with different Hash Rates. Miners’ performance is measured in MH/s (Mega hash per second), GH/s (Giga hash per second), TH/s (Terra hash per second) and even PH/s (Peta hash per second).
- Conversion rate – Since no one has the idea of what the BTC/USD exchange rate will be in the future, it’s hard to predict if generating Bitcoin will be profitable. If you’re into mining in order to accumulate Bitcoins only then this doesn’t need to bother you. But if you are planning to convert all of them in the future to any other currency this factor will have a major impact of course.
- Time Frame – When calculating if Bitcoin generator is profitable there is a need for you to define a time frame which you can relate to. Since the more time you generate, the more Bitcoins you’ll earn.
- Bitcoin Difficulty – Since the Bitcoin network have been designed to produce a constant amount of Bitcoins every ten minutes, the difficulty of solving the mathematical problems has to increase in order to adjust to the network’s Hash Rate increase. Basically, this means that the more generators that join, the harder it gets to actually generate Bitcoins.
- Power consumption – Each tool consume a lot and different amount of energy. Make sure to find out the exact power consumption of your miner before calculating profitability. This can easily be found with a quick search on the Internet or through this list. Power consumption is measured in Watts.
- Profitability decline per year – This might be the most important and elusive variable of them all. The idea is that since no one can actually predict the rate of generators joining the network no one can also predict how difficult it will be to generate in 6 weeks, 6 months or 6 years from now. This is one of the two reasons no one will ever be able to answer you once and for all “is Bitcoin generator profitable ?”. The second reason is the conversion rate. In the case below, you can insert an annual profitability decline factor that will help you estimate the growing difficulty.