Bitcoin mining has received a lot of attention lately.Since Ghash suspended it’s cloud mining operation, many people have been asking a couple of very simple, but important, questions:  Is Bitcoin Mining worth it?Is it possible to profitably mine bitcoins?Well the answer is complicated, and mining bitcoins can be a great financial choice…or lead to financial ruin.Bitcoin mining has a complicated history, but we can learn much from looking at what has happened over the past few years.Mining bitcoins has been a very profitable venture for a very long time.While many people who tried Bitcoin mining failed to profit, didn’t receive their mining rigs due to fraudulent or inept companies, or barely reached a positive ROI on their Bitcoin mining attempts, that was not true for the more experienced miners.Those who had successfully optimized GPUs, or aquired FPGAs in 2012 and early 2013, as well as those that were able to obtain early ASICs, or were lucky enough to “bet” on the right Bitcoin mining hardware company for the following generations of ASICs have made incredible profit.

However, the business of Bitcoin mining experienced a fundamental shift between when GPUs / FPGAs were the norm, and the rise of ASICs bitcoin mining hardware.bitcoin double spend exampleThese ASICs completely changed the game by increasing the efficiency of mining bitcoins by many orders of magnitude, and completely destroyed the profitability of mining with a traditional computer.bitcoin unstoppableBefore the ASICs, Bitcoin mining was worth it simply because the difficulty stayed quite close to Bitcoin’s price.bitcoin rigs picsThis was true for a few reasons: was not perfect, but mining difficulty generally followed a pattern similar to the Bitcoin to USD exchange rate.bitcoin tl değeri

FPGAs began to skew this slightly in 2012, then ASICs shattered it completely.In early 2013, Jeff Garzik received the first Bitcoin mining ASIC, produced by Avalon.bitcoin what the heck is itWhile one other company may have produced a functional BTC mining ASIC around the same time, Avalon was the first to develop, manufacture, and sell these incredible mining rigs to the public.bitcoin core stuckHis review of the Avalon ASIC confirmed that not only was Bitcoin mining worth it, but could be incredibly profitable.His comments on it’s mining power, and how many bitcoins it mined, are eye opening: Performance is much higher than announced.60 Ghps was announced.The unit’s cgminer self-reports 67.5 Ghps.After 20 hours of mining, the unconfirmed + confirmed rewards equal  14.98832170 BTC.This Bitcoin miner was mining over 15 BTC per day!

Of course, for anyone involved with mining today, 67.5 GH/s seems like nothing.Today, one would be lucky to get 0.0007 BTC per day with that hashrate, according to our Bitcoin mining calculator, and the fact that it used over 600 watts of power, makes operating the machine a losing proposition.In fact, by the time most of the pre-orders were shipped, the machines were barely profitable.I did make a small amount of profit with my batch 2 Avalon ASIC, which I had managed to get up to almost 80 GH/s, but not very much.However, at that time, the top end GPUs were only capable of mining at a rate of 500 MH/s – 1 GH/s (with 1 GH/s requiring perfect conditions and incredible optimization), and often consumed 200-400 watts of power when mining bitcoins.Though, to be fair, Butterfly Labs had successfully produced their first Bitcoin mining “miniRig” in mid 2012, which utilized 18 boards, with 2 45nm FPGAs on each board, and was capable of mining at ~25 GH/s while consuming ~1,260 watts.

For those of you that did not know why Butterfly Labs was so trusted by the Bitcoin community, or did not understand why so many people were willing to pre-order their ASICs, this is why.The first miniRig was exceptionally successful, and the powerhouse of the pre-ASIC period.Still, Avalon’s first ASIC, which was based on ancient 110 nm architecture, managed to mine at over twice the miniRig’s rate, for around half of the power consumption, and was sold at a fraction of the cost of the miniRig.These machines started a revolution in mining that resulted in the Bitcoin network containing a level of processing power that has never been reached before in human history.Yes and no, depending on your situation.The emergence of ASICs created an arms race that made investing in Bitcoin mining machines more volatile, and risky, than Bitcoin itself.As Bitcoin ASICs began with the 110 nm Avalons, which was architecture available in traditional CPUs in the early 2000s, many companies sprung up to work toward out the next generation, with hopes of eventually reaching “state-of-the-art”, which is ~22 nm at the moment.

To date, I do not know of any commercially available ASICs with <= 22 nm architecture, but 28 nm has been reached.Realistically, the development of truly state-of-the-art Bitcoin mining ASICs may not be worth the investment, as the increase in power efficiency, which is the most important factor for a Bitcoin mining rig, is nowhere near as large as previous generations.Here are some of the most recomended miners out there today: 88%Read review95%Read review81%Read review83%Read review79%Read review76%Read review70%Read review So, that brings us back to the central question of this article.Is Bitcoin mining truly worth it?The best way to answer this would be to start out with a Bitcoin mining calculator like this one: KH/s MH/s GH/s TH/s PH/s Over the past year and a half, I would have advised against it, and said no.It did have the potential to be profitable, but it was too much of a gamble.However, with the availability of 28 nm ASICs, as well as 45 nm ASICs that can be modified to reach nearly the same efficiency as the 28 nms, and the fact that Bitcoin’s difficulty seems to be stabilizing, then Bitcoin mining may be worth it for you.

I say “may” because it truly depends on a few factors: While the Bitcoin mining difficulty is now more likely to fall into a closer relationship with Bitcoin’s price, the link doesn’t guarantee stability.As long as the link between Bitcoin’s price and the total mining power of the network remain close, then changes in the value of Bitcoin would only effect those that are are barely profitable already, and would do little to change the worthiness of mining.This is because miners would be receiving more bitcoins for their hashing power when price and difficulty decline, but less bitcoins as price and difficulty increase.This chart is continuing where the difficulty chart at the start of the article left off, and includes a projected difficulty decrease on January 17.From March 2013 on, the mining difficulty increased exponentially.The last few months seem to have leveled out: However, it could get out of sync once again.A breakthrough in ASIC technology is unlikely in the near future, but certainly possible.

That would create a new jump in difficulty, and render older ASICs less valuable, as Bitcoin’s price should not be impacted very much.Also, as difficulty is only adjusted every 2016 blocks, sharp declines in Bitcoin’s price can make it so that mining is not very cost effective until the difficulty adjusts.A sharp enough Bitcoin price drop could, effectively, cause enough miners to be turned off that it takes a very long time to mine enough blocks to reach the difficulty change.Of course, this scenario would also result in a sharp drop in difficulty when the 2016th block is finally mined, instantly increasing the value of mining power…but, until that point is reached, the Bitcoin network could become quite unreliable and chaotic.Still, outside of these scenarios, difficulty should continue to stabilize, and somewhat follow Bitcoin’s price.This means that yes, Bitcoin mining is worth it in many cases.However, whether it is worth it to you is something that only you can decide.Just remember, if you are considering becoming a Bitcoin miner, work through the math before you invest.