If you want to learn more about Bitcoin mining in Australia, this guide will deliver the overview you need to get started. The following document discusses everything from the history of Bitcoin mining, to the types of Bitcoin mining hardware that exist, and much, much, more.
By the time you’re through reading, you’ll know some basic information on Bitcoin mining topics such as:
- How to mine Bitcoin in Australia?
- How much does it cost to mine Bitcoin in Australia?
- Is Bitcoin mining profitable in 2020?
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Bitcoin Mining Australia: An Overview
Bitcoin is a type of virtual currency. Unlike fiat currencies, which are issued and distributed by a governmental body, Bitcoin is not controlled by any country or government. As a result, the way that the Bitcoin supply is regulated is through a process called mining.
Bitcoin mining is the backbone of how Bitcoin works. It is the underlying process that is critical to the function of Bitcoin. Bitcoin mining performs two critical roles on the Bitcoin network: verifying new transactions, and creating new Bitcoin.
Every time that a Bitcoin transaction occurs, it must first be verified before it can be added to the public ledger. This public ledger is called the blockchain. This ensures that the correct person receives the Bitcoin that was sent, and prevents bad actors from “Double spending”.
Essentially miners act like auditors, protecting the Bitcoin network by safeguarding all transactions. The process of mining is very computationally intensive. In order to incentivize miners for their work, they are rewarded with Bitcoin for their participation.
Once a miner has verified a transaction, they receive new, never before spent Bitcoin as compensation. This is how new Bitcoin is generated. The miner can choose to either hold on to the Bitcoin, or sell it for cash on an exchange like Swyftx.
How Much Does it Cost to Mine Bitcoin in Australia?
You might be wondering, how much does it cost to mine Bitcoin in Australia? The answer isn’t so easy. The two main costs related to Bitcoin mining are the equipment costs and the electricity costs. If you make more money from mining Bitcoin than it costs you to mine Bitcoin, then there is no cost associated with it. The Bitcoin is all profit for the miner.
Here in Australia, the cost of electricity is between 23c/kWh and 40c/kWh. The mining computer that you purchase (if you could even find one), will vary from a few hundred to a few thousand dollars.
As we will delve deeper into later, there are three types of mining. Each has its own advantages and disadvantages related to cost and hash rate. That’s only the start to answering the question “How much does it cost to mine Bitcoin in Australia?”
How to Mine Bitcoin: Australia and Beyond
As we mentioned earlier, the process of mining Bitcoin is very computationally intensive. Miners compete with each other to verify transactions and receive Bitcoin as a reward. In order to maintain fairness to miners, the amount of computational power necessary is constantly increasing, meaning the difficulty is continuously on the rise. The measure of this computational power, or difficulty, is known as Bitcoin’s “hash rate”.
Approximately every 10 minutes, the underlying code of Bitcoin generates a specific number that the mining machines are each trying to guess. Each mining machine, or “rig” as they are sometimes called, makes trillions of guesses per second. The number of guesses that a machine can make is what constitutes its hash rate.
The higher the hash rate that a mining rig has, the more attempts it can make to guess the number, and greater the chance it has of generating new Bitcoin. The higher the hash rate of the machine, the more Bitcoin it will be able to mine.
As the number of mining rigs in the Bitcoin network grows, the hashrate of the network increases. The higher the hash rate of the Bitcoin network, the greater the difficulty to mine new Bitcoins.
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Bitcoin Mining Australia: A Brief History and Breakdown of Hardware
Central Processing Unit (CPUs) mining was the first method used for Bitcoin mining on a personal computer. However, around the time Bitcoin rose to USD$0.10 per coin, the first devices that used Graphics Processing Units (GPUs) were introduced. Then, in 2011, Field Programmable Gate Arrays (FPGAs) soon overtook GPU miners. ASIC mining eventually splashed onto the scene in 2013 by Chinese hardware supplier Canaan Creative.
Different types of Hardware for Bitcoin Mining: Australia
There are three main types of mining that Australians use to generate new Bitcoin: CPU mining, GPU mining, and ASIC mining.
Types of Hardware Used
Each of the following hardware types refers to the category of hardware that is being used. We will discuss three types of hardware, as well as the pros and cons of each.
CPU: Central Processing Unit
A CPU is the Central Processing Unit on a computer. It is responsible for executing the functions necessary for a program to run. This could be your word processor or your web browser.
When Bitcoin was first introduced in 2009, the hash rate could easily be measured in hashes per second. This was due to the low number of people participating in the Bitcoin network, and thus the low amount of computing power required to mine Bitcoin.
One of the main advantages of CPU mining is that it does not require any special hardware in order to work. However, it does cause additional wear and tear on your CPU, which can mean that you may need to buy a new computer sooner.
Nevertheless, the main disadvantage of CPU mining these days is that it is nearly impossible to mine BTC on a CPU. This is due to the high hash rate of the Bitcoin network,, and thus not profitable at all.
In the heyday of BTC, Bitcoin could easily be mined on CPUs in the background of your computer’s processes. However, as the number of people on the network grew, so did the hash rate. In order to adapt to the growing processing needs that Bitcoin mining demanded, many miners switched to GPU mining instead.
GPU: Graphics Processing Unit
A GPU is a Graphics Processing Unit on a computer. Sometimes called a graphics card or video card, It is designed to run repetitive processes that normally drain the processing power of a CPU.
Many gaming computers use powerful GPUs to help smooth the processing of the intensive 3D graphics and videos. By devoting a specific chip to these processes, it reduced the overall burden on the CPU. The same logic applies to mining as well.
Two of the main advantages of GPU mining is that it is much more efficient than CPU mining, and the hardware is readily available. Almost every computer store sells a variety of different video cards for gamers who desire faster, smoother graphics. These GPUs are easily repurposed for the task of Bitcoin mining.
One of the main disadvantages of GPU mining are its high power consumption, which can cause electricity bills to skyrocket . At first, while the hash rate was still relatively low, single GPU mining was fairly effective and profitable.
As the hash rate started to grow, the need for more computational power did as well. Rigs expanded to include multiple GPUs strung together, and eventually miners began stringing multiple rigs together to harness more hash power.
Eventually miners began to search for alternatives to GPU mining that could deliver better performance with higher efficiency. This led to miners turning to a technology that had already existed for a while, but had never been used for mining: ASIC chips.
Application Specific Integrated Circuit: (ASIC)
Essentially, it is a type of chip that is dedicated to running one specific type of process. With regards to Bitcoin mining, it is designed to solely run the hash algorithm that underlies the Bitcoin code.
While there are many advantages to ASIC mining, there are a few disadvantages to keep in mind as well. The two main advantages of ASIC mining are their high hash rate and their low power consumption. Since ASIC is designed to run only that single process, ASIC chips have a much higher hash rate than CPUs or GPUs. In addition, the efficiency of the process uses significantly less power than the other chips.
Both of these factors combined make for the highest mining profitability, as your hash power will be very high but not your electric bill. However, these advantages come with some drawbacks.
One major disadvantage is that ASIC chips tend to be much more expensive than CPUs or GPUs. As a result, there will be a higher startup cost for mining. In addition, because they are application-specific, they can only process one specific hash algorithm.
This means if the coin’s value drops, you are stuck mining it. There is no way to switch over to mining another coin, which is possible with CPU and GPU mining. ASIC chips also have a notoriously short lifespan, which means you will probably have to buy another one sooner than you would like.
Bitcoin Mining Calculator
The type of mining setup you use determines the amount of Bitcoin you yield from mining. There are tools dedicated to identifying how much money you can make from Bitcoin mining. These Bitcoin mining calculators take into account energy cost (KWh), Bitcoin mining pool fees, and power consumption rates among other factors.
Frequently Asked Questions:
How to mine Bitcoins?
Bitcoins are entered into the total circulation of Bitcoin through the Bitcoin mining process. Miners compete to confirm new transactions and solve complex mathematical problems. Miners constantly check new blocks against the immutable ledger of the blockchain, ensuring consistency and security. They receive Bitcoin as a reward.
How does Bitcoin mining work?
You are more likely to win the lottery jackpot than you are to solve a Bitcoin mining computation.
In order for Bitcoin mining to take place, two things must happen:
- One transaction, at least 1 megabyte long, must be verified by the miner;
- Solve a complex math problem via Proof-of-Work (Generating a 64-digit hash that is equivalent or less than what is known as a target hash).
A computer will generate random numbers until it arrives at a solution, so you need a little luck. However, as of August 2020, the chance of a miner producing a below-hash target is 1 in 16 trillion. So a little luck is actually the understatement of the year.
Bitcoin mining profitable in 2020?
The fact that ASIC mining rig manufacturers are selling out should tell you something. The demand to mine Bitcoin is strong. In March 2020, the Bitcoin mining hash rate broke its all-time-high. The record as of August 17, 2020 was 130EH/s. At that time, the price of Bitcoin was USD$12,300, and miners earned AU$108,486 per block.
If you mine 1 Bitcoin today, you would earn roughly AU$92,000.
How long would it take to mine a Bitcoin?
While the average time to mine a block takes around 10 minutes, the time has gotten under 9 minutes in 2020. For 6.25 Bitcoin, 8 to 10 minutes of work isn’t too bad. However, with the startup costs, the actual amount of time it takes for a single person to break even with mining can take years. Depending on the hardware, setup, and mining difficulty rate, the actual amount of time it takes to mine Bitcoin will vary.
How much data does mining use?
To be clear, each mining operation is set up by an algorithm, and that algorithm’s particular adjustment will determine how much data Bitcoin mining uses. On March 19, 2018, the average daily bandwidth of a miner’s data consumption was 75.02MB. To put that into perspective, most streaming services tell you that you need about 5Mbps to watch a movie.
If you’re talking about mining Ethereum, those rates will also change. One Ethereum miner commented in a Youtube video that his mining rig was capable of a bandwidth upload speed of 4.4MB per day.