How does a Bitcoin mining pool work?
Building passive income?
Since the start of 2017, it’s not uncommon to come across a headline or a post with the latest Bitcoin price update. With all the media coverage lately, the question on everyone’s mind seems to be whether or not investing in cryptocurrencies is profitable?
Disclaimer: This is by no means a form of financial advice. I am merely documenting my experience within the role I play in the cryptocurrency ecosystem.
To put it simply, I mine Bitcoin. I have a mining machine that mines Bitcoin. Well actually, I don’t have the machine with me. More specifically, I bought a mining contract that pays me for 1000 days of mining.
I know it doesn’t make sense at first glance, but let me explain.
Buying your own miner vs joining a mining pool
Mining on your own is not as easy as just buying a mining rig and setting it up. The electricity to keep the mining machine running 24/7 will definitely have an impact on your electrical bill. Also, depending on the hardware inside the mining rig, some components may need to be upgraded in the near future in order to keep mining the same amount as when you initially started.
Without keeping your machine up to date, your monthly earnings this month, will not be as much in a few months down the line as the blockchain network is constantly growing and will continue to require more processing power to be maintained.
To overcome this problem, I joined a mining pool. With a mining pool, I own shares within a mining rig. With a mining share, I get 1000 days worth of mining. And if I wanted to, I can use some of the profits from my mining to buy new contracts for another 1000 or so days. That way, you could perpetually earn Bitcoin forever (until 21 million Bitcoins).
So I joined Bitclub Network (mining pool), who’s mining facility is in Iceland, where electricity is cheap and the temperatures keep the machines cool.
