Over the years, cryptocurrency has continued to grow in popularity and has proved to have a lot of uses. Not only can you use crypto to conduct transactions and store wealth, but you can also make money with it. You might be wondering how; by mining it, of course!
Mining Bitcoin is one of the most popular ways to make money, and Nigerians are not left out of it. Although mining Bitcoin in Nigeria can be a lot harder than mining it in developed countries, that does not make it impossible.
Keep reading to learn more about Bitcoin mining; how it works, the equipment you need, some limitations you might encounter while mining in Nigeria, how much you can earn and more.
What Is Bitcoin Mining?
Bitcoin mining is the act of solving complex puzzles and math problems, thereby creating new Bitcoin to be released into circulation. The mining process also confirms transactions on the cryptocurrency’s network and makes them trustworthy.
When a bitcoin is mined successfully, the Bitcoin miner earns an agreed amount of BTC.
According to Wikipedia, Bitcoin is a decentralised digital currency that can be transferred on the P2P bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a publicly distributed ledger called a blockchain.
Bitcoin is the first ever cryptocurrency to be launched. It was launched in 2009 by Satoshi Nakamoto. From 2009 till date, over 12,000 cryptocurrencies have come into existence. Still, Bitcoin has remained the most popular crypto and is the largest by market cap (318.22 Billion), followed by Ethereum (146.3 billion) and USDT (65.32 billion).
How Does Bitcoin Mining Work?
For a Bitcoin miner to add a block successfully, they need to compete to solve very complex math problems which require the use of expensive computers and large amounts of electricity.
To complete the mining process, miners must arrive at the correct or closest answer to the question. Guessing the valid number (hash) is known as proof of work.
Miners guess the target hash by randomly making as many guesses as quickly as possible, which requires significant computing power. The difficulty only increases as more miners join the network.
The needed computer hardware is application-specific integrated circuits, and the price is as high as $10,000. Application-specific integrated circuits consume vast amounts of electricity, which has been criticised by environmental groups, and another downside is that it limits the Bitcoin miners’ profits.
3 Things You Need To Mine Bitcoin
1. A Crypto Wallet:
A cryptocurrency wallet is a digital wallet used to store and receive crypto and make transactions. To get started with Bitcoin mining, you need to own a crypto wallet, and this is because this is where you are going to store the Bitcoins you earn from mining.
2. Software For Bitcoin Mining:
Mining software is another essential tool to mine Bitcoin successfully; the reason is pretty apparent. You can mine bitcoins once the software is installed using the necessary hardware.
There are various mining software providers, and you do not have to pay for most of them as they are free to install on your Apple MAC and windows computers.
3. A Computer:
Of course, you cannot mine Bitcoin without a computer, but not just any random computer (I guess the Tech bros with their Macbooks don’t win this round); in order to mine Bitcoin, you will need a potent computer that consumes a lot of electricity. These types of computers are usually very expensive and cost about $10,000 or even more.
Limitations of Mining Bitcoin In Nigeria
1. Expensive Equipment:
Although Bitcoin mining software is usually free, the hardware, such as the computer, typically costs a lot of money. As mentioned earlier, it could cost anywhere from $10,000 and above. Because the price is in US$, we need to consider the exchange rate between Naira and the Dollar. The current exchange rate is 775 Naira for 1 US Dollar, so that means the mining computer costs about 7.5 million Naira or more.
2. Crypto Regulation:
As we all know, in February 2021, the Central Bank of Nigeria (CBN) restricted cryptocurrency in the country. So, not only does this affect crypto transactions, but it also affects mining it.
3. The volatility of Bitcoin:
One of the notable features of crypto is its volatility. This simply means that the price of crypto is unstable and tends to rise and fall according to the market. A year ago, Bitcoin hit an all-time high of $68,000, but currently, it is like we are begging it to rest on $20,000, but it is shy. With Bitcoin mining, because of its price volatility, the Bitcoin you earn might even come out less than what it costs to get your equipment and actually mine it.
How Long Does It Take To Mine Bitcoin?
With the best hardware and software equipment, you can mine Bitcoin in about 10 minutes. But we must admit that not everyone can access such top-notch equipment because of its high price.
But for lesser quality but durable equipment, it should take you about 30 days to mine Bitcoin.
How Much Can I Earn Mining Bitcoin?
After successfully mining Bitcoin, which requires adding a block to the blockchain, you earn a reward of 6.25 Bitcoins. But, every four years or after every 210,000 blocks, the reward is halved.
1 Bitcoin is currently worth about $16,000, which means that 6.25 Bitcoins are worth about $100,000. In Nigerian Naira, that is worth about 77.5 million.
We cannot deny that some things are harder to achieve in Nigeria, such as bitcoin mining, but that does not make it impossible. While you might struggle with the exchange rate in terms of buying mining equipment, the mining reward in Nigerian Naira is something worth smiling about.
Bitcoin mining requires the use of quality equipment to add blocks to the blockchain and release more Bitcoins into circulation.
With the right equipment and strong will, Bitcoin mining will pay off in the long run, even in Nigeria.