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Crypto Mining Australia: What you need to know in 2023
Carla Moretti
Bitcoin is the premier digital currency around the world. It has gained a reputation around the globe as a potentially disruptive digital currency that negates traditional banking channels. Many tech enthusiasts and internet users have flocked to trade Bitcoin, and today, it is part of a multibillion-dollar industry.
Bitcoin has a finite amount of coins, most of which are in online circulation. Any proof-of-work cryptocurrency is produced by mining, which involves computers using blockchain technology and cryptography to perform calculations to validate transactions.
Today, Bitcoin mining is hard to profit from and requires heavy investments before one can make a buck. This Crypto Mining Australia Guide explains how Bitcoin mining works and how you can do it to realize your crypto-mining Australia dream.
A quick intro to Bitcoin
Bitcoin (abbreviated as BTC) was first introduced by Satoshi Nakamoto – an anonymous person or group of persons – who wanted to create a currency that was free from the influence of state-run banks, as well as conventional banks.
Bitcoin is a distributed digital transaction ledger that is recorded on a blockchain. The ledger is operated over a network of several computers that store the complete or partial transactions.
The blockchain is essentially a database that stores data in blocks, that are linked by time stamps. A block can store a limited amount of transactions, and after some time, a new block is created to accommodate a growing list of transactions,
The first BTC transaction occurred in 2010 when a man bought 2 Pizzas for 10,000 BTC (roughly 60 AUD at the time).
Since then many people have bought the cryptocurrency, using it as a currency and a digital asset.
Soaring interest in Bitcoin became a catalyst for its appreciation and in November 2021; Bitcoin reached its highest price, crossing 83,000 AUD. Its value has since dropped drastically, and it is currently valued at just above AUD 24,000 (stand November 2022).
Bitcoin’s high volatility has not deterred tech-savvy businessmen to invest in crypto mining operations, and that includes Australians.
Why mine Bitcoin?
The main advantages of mining Bitcoin are:
- Immutability: the transactions are permanently stored on a digital ledger
- Security: Cryptographic technology means that it is safer from hackers
- Anonymity: Anyone can conduct a bitcoin transaction without the need to publicly identify their names
- Transparency: The complete record of the transactions is available and viewable on the Bitcoin blockchain.
BTCs high price makes it attractive to people who are willing to go through the hoops to acquire it, through the use of cryptocurrency mining hardware.
What is Bitcoin Mining and how does it work?
Every Bitcoin transaction consists of inputs (transaction amount in BTC, private and public address pairs) and outputs (a cryptographic SHA-256 hash and a private key). To verify the transaction, an SHA-256 value generated in a BTC transaction needs to be identified.
Identifying the hash value is a complex mathematical problem that requires computing power. This is where bitcoin miners become useful. Bitcoin miners use mining hardware to solve the mathematical puzzles needed to validate every transaction.
Once a transaction is successfully validated, the network requests a group of miners to ‘agree’ to the validation and one computer is assigned to write the transaction to the blockchain.
Some transactions are added to an existing block, while for other transactions, a new block needs to be created.
To encourage Bitcoin miners to provide computing resources to the network, a mining computer (also called a mining node) is rewarded with a fixed amount of BTC through a Proof-of-Work (PoW) algorithm, on the creation of a new block on the Bitcoin Blockchain.
In this way, users that have powerful crypto mining hardware are encouraged to join the network and given preference for receiving Bitcoins, as they can validate more transactions to clear the network.
Over the years the mining process has become very competitive, as many users have entered the Bitcoin mining network to compete for Bitcoin rewards.
Bitcoin’s PoW scheme naturally led to many users buying expensive hardware to build competitive cryptocurrency mining setups. The flurry of hardware purchases from Bitcoin miners and crypto investors was the result of a hardware crisis, a phenomenon that has polarised many consumers on Bitcoin mining.
Types of Bitcoin Mining
There are 2 different ways for Bitcoin mining in Australia These are as follows:
- Personal mining
- Cloud mining
Personal mining
Personal mining, as the phrase suggests is done by individuals using a PC for mining. The PC can be a regular computer or a custom crypto mining rig with a high-powered processor and GPU. It is recommended to have the latter, as it is more powerful and efficient for the job. The users need to install a client for turning their mining rigs into a Bitcoin network node.
Personal mining is one of the cheapest options in Australia to mine Bitcoins. You also have control over your PC and can pause it for doing other tasks from the comfort of your home. However, trying to mine cryptocurrency this way is usually inefficient as normal cryptocurrency mining rigs are usually less efficient.
Mining PCs also consume a lot of power, something which the Bitcoin mining network is notorious for. If you are mining Bitcoins at home, then you should prepare for a high electricity bill.
Today, special computer chips called ASICS (application-specific integrated circuits) are used to mine cryptocurrency at high speeds. ASICS are designed to maximize the hash rate for mining for each watt of power.
However, ASICS are not recommended for average users as they require expertise to configure and optimize. They are also very costly to purchase.
Cloud Mining for Crypto mining australia
Cloud mining is a new option available to Australians for crypto mining. In Cloud mining, a buyer purchases physical crypto-mining hardware through a contract. The hardware is typically present in a large complex (a mining farm) and is usually an ASIC configured to run multiple mining servers.
Cloud mining has the obvious benefit of not having to think about physical space or buying your own hardware. Cloud mining services also offer options to mine other cryptocurrencies like DOGE, ETH, and LTC. However, cloud mining services can still be expensive, as they require massive amounts of power, and that cost is passed on to buyers.
Mining Bitcoin in Australia
Australian users should consider being part of crypto mining pools. This is because trying to personally mine cryptocurrencies is difficult as Bitcoin miners compete with other users and mining pools. So, if you don’t have the power of many crypto mining rigs, you’ll have a tough stand against the competition.
A mining pool is a collective of nodes that pools their computing resources together to share the priority of validating transactions. Mining pools will be able to receive rewards faster, due to the increased output and lower competition.
You should ideally look for users who are in your state to reduce latency and increase the likelihood of your inclusion into the pool. For Australian crypto mining enthusiasts, it is important to look for a trustworthy mining pool.
Australia is also allowing many businesses to open up crypto-mining farms, some of which operate on renewable energy. This is a win for everyone since it reduces the carbon footprint, as well as the break-even point for Bitcoin mining, making Bitcoin mining sustainable.
Recently, green mining farms in Australia have been set up in Byron Bay (Mawson Group), New South Wales, and the steel city of Whyalla (Lumos Digital Mining Company) in South Australia.
Is Bitcoin Mining Profitable in 2023?
Bitcoin mining was very profitable in the early years of cryptocurrency. Today, it is harder to rake in some income from a bitcoin mining operation, but not impossible.
Factors that make crypto mining difficult are:
- Increased hardware costs, especially GPUs
- High power costs due to rising fossil fuel prices and inflation
- Increased mining difficulty due to high competition from other nodes
- Lower Bitcoin rewards over time due to the halving rule.
Despite these challenges, innovations in technology and updates to Bitcoin mining software have allowed entrepreneurs to receive profits from Bitcoin mining activities. Some of the reasons that make crypto mining profitable are:
- The development of more efficient hardware (ASICS) that has high hash rates
- Alternative energy solutions like solar and rechargeable battery tech that reduce the dependence on fossil fuel and make it cheaper to run a mining rig.
- Increased availability of trustworthy mining pools that increases mining rewards
How can you mine Bitcoin in Australia?
Here are some tips to start mining Bitcoin in Australia. As we mentioned above, there are 2 basic ways.
Mining Crypto at Home with your Personal Mining Rig
Before you start, check a mining calculator to see how your current hardware performs. This should give you an idea of how much profitably you can make, and the gear you need for a new mining rig if you need to cross the break-even point.
Here’s a guide to mining calculators for Australians.
- Select the crypto-mining hardware for your rig. We advise you to do a cost analysis for choosing an ASIC over a standard CPU/GPU PC setup. This site offers custom cryptocurrency mining rigs for Australian enthusiasts. Two important factors to consider when buying hardware are the hash rate. and power usage (Wattas). The hash rate is the number of calculations performed per second. It is usually expressed in mega hashes per second or MH/s). Ideally, you want to choose hardware with a higher hash rate and low power consumption.
- Choose a crypto mining pool. For best results, you need a reliable and trustworthy pool that is consistently online and provides good opportunities for rewards.
- Download crypto mining software. There are different software programs available for Bitcoin mining. Basic and Open Source software normally requires some technical knowledge. But user-friendly options are available. Some Bitcoin mining pools may also recommend a specific software to join the pool.
- Store your Bitcoins in a wallet. This keeps your earnings safe. You can use digital wallets or hardware wallets, each of which has its advantages and disadvantages. Here is a guide to the best Bitcoin wallets in Australia.
Using a Bitcoin Cloud Mining Service
- Choose a cloud mining service provider. Check all the options available to you across the country and state. You should do your own research to see which service is reliable.
- Review the contract offered by the service. You should note the fee structure (double-check to see if there are any hidden charges and taxes), the duration of the contract, the hardware provided, and their data policy.
- Select your crypto mining pools. Some services will offer you a choice through their contract or their application’s user interface. Choose your pool carefully after looking at its online reputation. You can do this by checking related forums and reading user reviews.
- After you have started to mine Bitcoin, choose a wallet for storing your cryptocurrency. For cloud mining services, we recommend choosing a hardware wallet. Hardware wallets offer physical protection, and this is ideal when using third-party services for managing your crypto assets.
Our extensive analysis of the Australian Crypto Space doesn’t stop here. You can also check out our Guide on how to buy NFTs in Australia.
FAQ
Most frequent questions and answers
While cryptocurrency is accepted by some merchants in Australia, and some ATMs allow customers to withdraw Bitcoins, it is not legal tender in Australia.
Yes, any Bitcoins or digital currency earned from crypto mining is subject to Capital Gains Tax.
A license is not needed in Australia for personal mining. Businesses running crypto mining operations are required to have a business license.
Furthermore, if they are running an exchange market for cryptocurrencies, a range of financial services laws and regulations apply.
The right answer depends on your budget. You can mine Bitcoins using a high-end laptop from razer, Asus, Apple, or Alienware.
However, advanced users can consider ASICS and mining rigs like the Antminer and Avalon Miner series.
Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade, or sell any investment instruments or products, including but not limited to cryptocurrencies, or use any specific exchange. Please do not use this website as investment advice, financial advice, or legal advice, and each individual’s needs may vary from that of the author. Investing in financial instruments, including cryptocurrencies, carries a high risk and is not suitable for all investors. It is possible to lose the entire initial investment, so do not invest what you cannot afford to lose. We strongly advise conducting your own research before making any investment decisions. This post includes affiliate links with our partners who may compensate us.
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