You want to have a side-gig and earn more income. Cryptocurrency mining may be your choice! Not a tech-savvy guy? No problem! You don’t need advanced computer knowledge to begin earning.
Technology brings opportunities. With one up-to-date, powerful computer and a secured internet connection, you can sit comfortably at your home and begin to earn money by bitcoin mining.
Bitcoin or other crypto mining is a populous participation game. Singapore is no exception. Today, you can start mining with fewer hindrances. The question: is bitcoin mining profitable? Let us explore.
What is Crypto Mining?
Crypto mining is the process of finding a solution to a mathematical problem and racing to be the first to record the answer on a transaction ledge, named blockchain, finally to get rewards: bitcoins.
Blockchain technology is the backbone of the cryptocurrency industry. With the latest technological advances, blockchain, a decentralized finance field, allows people to make financial deals without third-party monitoring or control like banks or other financial institutions.
After passing strict requirements, a transaction initiator records a deal on a decentralized digital ledger. The information on the blockchain is permanent and unerasable. Block by block, more and more ledgers created by miners come to the system.
New blocks with solutions will send to a computer network for members to validate. Once completed, the system generates a certain amount of bitcoins(6.25 bitcoins) for your work and refunds transaction fees you insert into blocks. The first winner with the same answer key can make a new block. You are running a contest with competitors in a limited timeframe!
How to Mine Bitcoins
Step One: Equipment
Bitcoin mining is a guess, and race-against-time game as only one winner can get the trophy among numerous solvers for a mathematical equation at a time. Equipment is crucial in winning the competition. You can use your home-based PC for mining in theory but may lose the race, as other rivals use more professional and powerful tools to do the job.
A tailor-made and up-to-date computer component for mining is the best choice for the first step instead of one for other purposes. The ASIC(Application Specific Integration Circuit) is for mining only and should form a part of the investment. To save costs, you may purchase them in second-hand stores like Amazon or eBay.
Step Two: Calculate your costs & Choose a Miner
Besides computer hardware, bitcoin mining is an electricity-consuming business. You should compare the miner’s consumption costs on your computer to determine its feasibility. Antminer S19 Pro, Antminer T19, and S30++ are noted crypto miners providing detailed references for costs a computer will consume on mining.
Step Three: Obtain a Bitcoin Wallet
If you decide to mine bitcoins, choosing a wallet for the coin is the next step. You need to store the cryptos once earning. 3 types of crypto wallet are popular and available to miners: desktop, hardware, and mobile.
Step Four(Optional): Find a Mining Pool
Crypto mining is a competitive activity as rivals worldwide like you are racing to win this game day and night. You may need a team effort to win the game except for the advanced equipment. A mining pool is a network of team members cooperating to share efforts in finding answers to mathematical equations and transaction fees, and profits.
Before joining, you should review the terms & requirements and credibility of a mining pool. One advantage of a mining pool is you have a high possibility of successful mining through joint effort and professional work. The drawback is your award is less than you mine it alone.
Step Five: Install a Mining Program & Start Mining
Whatever way you dig bitcoins, you need to install a mining program to monitor your mining rig, as some digging pools do not have programs to control progress. A mining program helps scan your hardware’s performance and leads to saving your costs. All things set, you can start mining.
Is Crypto Mining Profitable, and What Challenges Lie Ahead?
The answer depends on where you live, what equipment you have, how you mine, and Bitcoin’s price.
1 .Hashrate
The Hashrate is the speed your computer can solve a problem. The more powerful your computer is, the quicker it generates solutions. You have a higher chance of winning if you can solve more problems.
2. Electricity
It is about the electric power cost you spend on digging bitcoins. Crypto mining is a heavy-consuming business. The energy cost for a miner living in an electricity-subsidized country or a place without any electricity subsidy is vastly different. The power consumption cost has a significant impact on mining. Besides, miners have various power consumption requirements(watts), and to save costs, you should research the appropriate to work with.
3. Transaction fees
The fee is a charge a mining pool imposes on your rewards if you choose to participate and is successful in digging tokens. The fee is 2% of your compensation typically.
4. Fierce competition
With the increasing value of the digital token, more and more people are joining bitcoin’s mining job, leading to lower success rates. Chances are you have a lower rate of success working alone than working with a joint effort. Likewise, your rewards will be smaller from a mining pool than from working alone.
5. Decreasing rewards
Bitcoin compensation has a scaling-down trend. Owing to the competition and increasing value, the administrator reduced awards from 50 bitcoins in 2009 to 6.25 now every a few years(the number of bitcoins awarded usually changes every 4 years.) The following review may be in 2024.
Bitcoin price
Like other cryptocurrencies, bitcoin has been undergoing drastic price changes in the past. When its price is climbing, more and more people will join the “gold rush” for more fortune. Yet, if the price drops abruptly, you may lack the incentive to mine the coin as the cost may outweigh the return and lose your investments like computer equipment or transaction fee.
Is Crypto Legal In Singapore?
Cryptocurrency is not illegal in Singapore. The authority does not treat it as a legal tender and not an official medium of monetary exchange. The Inland Revenue Department views the digital payment tokens as a good, subjecting them to the Goods and Services Act.
The worldwide regulatory environment is constantly changing and evolving, adapting to cryptocurrency’s technology development and user experiences. If you are investing in digital assets, you should continuously be open-eyed about the Singapore government’s latest development regarding policy changes. The following is the developing story.
Mr. Revi Menon, the managing director of the Monetary Authority of Singapore(MAS), says the Government is interested in maintaining an environment for fostering the growth of crypto technology, including blockchain, smart contracts, and Web 3.0. But the MAS will adopt “strong” regulations to protect the public and reduce systemic risks caused by the activities concerned. The MAS is regulating the cryptocurrency industry.
Singapore embraced regulations of cryptocurrency and its related industries in 2018. The MAS began monitoring and institutions licensing regarding operating cryptocurrencies and non-fungible tokens activities in January 2020.
Payment Services(Amendment) Bill
The MAS includes cryptocurrencies on its radar by monitoring money laundering and terrorism financing activities on the Payment Services(Amendment) Bill in January 2021.
Under the bill, the MAS regulates the digital payment tokens(DPTs) or cryptocurrencies and its service providers(virtual assets service providers). The regulated activities include cryptocurrency exchanges concerning DPT transfers, custodians, and facilitation of exchange across borders regardless of DPT owners, besides applications for exchange licenses.
Under the second part of amendment bill, the MAS should protect the public from asset risks and ensure services providers safeguard the financial stability and efficacy of its monetary policy. One example is that an exchange should separate clients’ assets from its funds.
Guidelines on the provision of Digital Payment Tokens to the Public
On January 17, 2022, the MAS published more comprehensive guidelines detailing its expectations of cryptocurrency service providers’ commercial behavior in public.
The Monetary Authority does not encourage the public to trade cryptocurrencies because they are risky and unsuitable for the general public. Let me clarify: The MAS doesn’t encourage but allows digital token trade!
Exchanges should inform clients of risks regarding tradings of cryptocurrencies, and assets are subject to investment losses.
Service providers should not promote their businesses in public under the guideline. The guideline applies to all institutions operating cryptocurrency businesses.
Promotion to the general public
Services providers, for example, should not mislead the public into underestimating the risks of investing in cryptocurrencies. The MAS forbids services providers to advertise and place promotional materials in public areas, including public transport tools, venues, broadcast media, periodical publications, third-party websites, social media platforms, public events, or roadshows.
They can promote their services on official websites, mobile applications, and social media. Still, They should adequately disclose the risks of cryptocurrency investment consistent with disclosure requirements under the Payment Service Act.
Services providers should not invite third parties like media influencers or their websites to promote their businesses, including joint promotion campaigns.
Automated Teller Machines are also the medium not allowed for promotional activities. The MAS considers it a public venue where people may make irrational investment decisions and undermine risks in investing in cryptocurrencies.
Promotion of payment token derivatives
Payment token derivatives(PTDs) are riskier than crypto assets. A PTD is an investment contract betting its value on the ups or downs of a crypto asset. Contract-for-differences and futures are payment-token derivatives. The MAS doesn’t regulate PTDs unless licensed exchanges under the Securities and Futures Act offer them. Find out the best crypto exchanges in signapore.
The MAS reminds crypto exchanges should not promote PTDs to the general public and mislead investors regarding the asset’s extreme risks even though they are not the targets for regulations.
The authority prompts services providers to separate PTD services from other crypto businesses from exchanges regulated by the MAS as PTDs are not within the jurisdiction of the Payment Services Act.
Service providers like crypto exchanges should register and get approval from the Monetary Authority of Singapore to offer 3 services. They are 1. The exchange of fiat money for cryptocurrencies; 2. The exchange of cryptocurrencies for fiat money; 3. The exchange of cryptocurrencies for other cryptocurrencies, including brokerage services, trading services, and offering a platform or market for customers to trade cryptos.
The MAS and institutions licensed should inform customers assets with services providers are not subject to protection if they suffer from losses due from 1. Theft, hacks, or misappropriation, 2. Financial institution bankruptcy, 3. Account withdrawal issues related to financial institutions.
You May Like to Know
Is Bitcoin Mining Legal in Singapore?
No, Singapore has no law prohibiting bitcoin or other crypto mining. However, the legal environment is changing around the world. You should keep an eye on the latest development to avoid loss and legal traps.
What is proof-of-stake(POS)?
An alternative to bitcoin mining, proof-of-stake is another popular way of creating a new cryptocurrency. Though not used in bitcoins, POW is more widely used for “digging” other popular cryptos like Ethereum, Solana, Cardano, BNB, and Algorand.
Unlike crypto mining, POW uses randomly selected validators to “mine” cryptos instead of a guessing competition. A validator must have staked digital currencies and use them as pledges for collateral. For example, Ethereum requires a validator should have staked 32 ETH to be a qualified person. A new block or crypto comes to the world when many validators confirm the accuracy.
To Sum Up
Crypto mining is not an illegal activity in Singapore. You should buy the most advanced mining equipment or join a professional mining pool to maximize the probability of winning. You shall get ready for high electricity bills because mining requires a lot of energy.
Key takeaways
- Crypto mining is not illegal in Singapore.
- Mining requires advanced equipment like the ASIC(Applications System Integrated Circuit) and high energy.
- Joining a professional mining pool can increase the success rate but reduce the rewards due to profit-sharing among group members.
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