How Bitcoin Miners Make Money

If you’ve been buying into Bitcoin, read this... If you’ve been buying into Bitcoin, read this...                                                                                                      [Wealth Daily] Alexander Boulden / Jan 10, 2024 How Bitcoin Miners Make Money Dear Reader, Unless you’ve been living under a rock or just choosing not to pay attention to it, you know that Bitcoin is currently riding out an epic bull run. It touched $47,000 for the first time in since 2021 this week. If you’ve been buying into Bitcoin, good on you. We’ve said in these pages before that it’s irresponsible not to own at least some crypto in your portfolio. We’ve also laid out our skepticism about the industry, reaffirmed by bad actors like Sam Bankman Chicken-Fried. But there’s no denying the staying power of crypto at this point. Now, you might be thinking, “I don’t have $47,000 to buy Bitcoin.” Well, for one, you can put whatever amount you want into Bitcoin; you don’t have buy an entire coin. Second, you can buy other cheaper cryptos, like Ethereum or Litecoin, that also tend to ride the crypto wave. Finally, you may be interested in buying Bitcoin miners. I’m not talking about going out and buying a bunch of supercomputers that suck up the amount of electricity that a small country uses... I’m talking about companies that do all this for you. Companies that buy the computers, do all the work, pay for the resources, and are rewarded with Bitcoin. You see, Bitcoin miners play a crucial role in the functionality and security of the Bitcoin network. A miner can be a single person or a company that invests significant computational power to solve complex mathematical problems and, in turn, secures the network and validates transactions. The process through which miners earn their rewards is known as "proof of work." It involves the computer solving these complex mathematical problems, and the first miner to successfully solve the problem gets the right to add the next block to the blockchain. This competitive process is what ensures the security and decentralization of the Bitcoin network. Google CEO Prepares to (Voluntarily) KILL Search Google Search is a moneymaking machine like no other. The platform turned free internet searches into $162 billion in cash last year. It dominates the industry, owning more than 90% of the market share (with 8.5 billion searches per day). Google’s name is a synonym for looking up information. But now CEO Sundar Pichai is about to pull the plug on search. Google has developed a new technology said to be 1000x more powerful than search. Employees have been testing internally for two years, and now the company is ready to unleash it on the world. [You have to see this to believe it.]( The difficulty of these mathematical problems is adjusted regularly to maintain a consistent block time, ensuring that new blocks are added approximately every 10 minutes. As more miners join the network, the competition to solve these problems intensifies, making it progressively harder to mine new blocks. This difficulty adjustment is a fundamental aspect of Bitcoin's design to maintain a stable and secure network. Sounds great, but how exactly do Bitcoin miners make money as a business? Well, there are three main ways... Block Rewards At the heart of a miner's income is the block reward. When a miner successfully adds a new block to the blockchain, they are rewarded with a certain number of newly created bitcoins. This mechanism not only incentivizes miners to participate in the network but also introduces new bitcoins into circulation. The concept of the block reward has evolved over the years. In the early days of Bitcoin, the block reward was set at 50 bitcoins per block. However, the system is designed to undergo a process known as the "halving" approximately every four years. During a halving event, the block reward is cut in half. This controlled supply mechanism is intended to mimic the scarcity and finite supply characteristic of precious metals like gold. The most recent halving occurred in May 2020, reducing the block reward to 6.25 bitcoins per block. The gradual reduction in block rewards is expected to continue until the maximum supply of 21 million bitcoins is reached, emphasizing the deflationary nature of Bitcoin. The next halving should take place in April of this year, which could put more upward pressure on the coin. Transaction Fees While block rewards form the foundation of mining income, transaction fees have become an increasingly important source of revenue for miners, especially as the block reward diminishes over time. When users initiate Bitcoin transactions, they have the option to include a transaction fee as an incentive for miners to prioritize their transactions. Transaction fees serve a dual purpose. Not only do they act as an additional reward for miners, but they also help prioritize transactions by allowing users to compete for inclusion in the next block. Miners are naturally inclined to select transactions with higher fees, optimizing their revenue stream. As the Bitcoin network matures and transaction volumes increase, transaction fees become a more significant part of a miner's income. This shift is particularly evident during periods of network congestion when users are willing to pay higher fees to expedite their transactions. 9 Billionaires Shifting Funds Here (Plus Warren Buffett) The smartest investors in the world are making a BIG move right now. David Tepper, Steve Cohen, Bill Gross, Paul Tudor Jones, Jeremy Grantham, George Soros, Carl Icahn, Jim Simons, and Larry Fink... They're jumping into oil and gas stocks with both feet. Meanwhile, 99% of investors can’t see what’s coming. According to Keith Kohl, our oil and gas analyst, three powerful economic triggers are converging on the oil markets right now... A "perfect storm" unlike anything we’ve seen in 50 years. The last time this happened, a small group of oil companies made 20x returns in a few years. Some gains were as high as 3,000%! That’s exactly the type of oil company Keith is recommending today.  He’s calling it "the No. 1 oil stock of the decade." [Get the name and ticker here before oil prices surge higher.]( Mining Pools Individual miners face increasing difficulty in successfully mining blocks as the network grows. To address this challenge, many miners join mining pools — a collaborative effort where participants combine their computational power to increase the chances of successfully mining a block. When a block is mined, the rewards are distributed among the pool members based on their contributed computational power. Mining pools provide a more consistent income stream for participants, even though it's shared among pool members. This collaborative approach allows miners with limited resources to actively participate in the mining process, contributing to the overall security and decentralization of the Bitcoin network. A lot of companies will also have a Bitcoin mining component — basically, if they have the money and wherewithal, they’ll make income on the side with some big computers and Nvidia GPUs. Drawbacks, Energy Consumption, and Market Volatility While the potential for seemingly easy profits exists in Bitcoin mining, it comes with challenges and risks. One significant concern is the environmental impact of the energy-intensive proof-of-work consensus mechanism. Bitcoin mining operations, particularly those powered by non-renewable energy sources, have faced criticism for their carbon footprint. However, there are many Bitcoin miners that utilize renewable energy, like wind, solar, and nuclear, to power their operations. Additionally, the volatile nature of the cryptocurrency market introduces uncertainties for miners. The value of mined bitcoins and transaction fees can fluctuate, affecting the profitability of mining operations. Miners must carefully manage their operational costs, including electricity expenses and hardware investments, to remain profitable. Following the Market Just like with other markets, you can invest in individual companies or market-tracking ETFs. The best ETF according to my research is the Valkyrie Bitcoin Miners ETF (NASDAQ: WGMI), which is up nearly 200% in the last year! The growth here is astronomical. Upcoming market catalysts for crypto and crypto miners include the launch of the fabled BlackRock Bitcoin ETF, among others, and the Bitcoin halving in April. Good investing. Stay frosty, Alexander Boulden Editor, Wealth Daily P.S. How would you like an investment calendar that maps out your trades every single month? Talk about set it and forget it. Better yet, what if this calendar tracked FDA approvals and matched you with corresponding stocks to give you a chance at MASSIVE gains? Sounds good to me. [Discover the secret catalyst that triggers the stock market’s BIGGEST single-day winners right here.]( [Feedback? get in touch](mailto:/newsletter@wealthdaily.com?subject=Wealth%20Daily%20feedback) [Read this email online]( [Manage Newsletters]( [Share on Twitter]( You signed up for our newsletter with the email {EMAIL}. You can manage your subscription and get our privacy policy [here](. This email is from Angel Publishing, 3 East Read Street, Baltimore, MD 21202 © Wealth Daily.