Cryptocurrency mining refers to using computers and a cryptographic process to solve complex transactions and record them to a blockchain.
To many, this process is seen as a transactional one because miners get paid for work done.
Is Bitcoin Mining Profitable in Nigeria? The Surprising Truth
The rewards with tokens that come from mining Bitcoin are the major reasons many investors in Nigeria are interested.
So, besides how much can be made from trading Bitcoin, extra gains can be gotten if you know how to mine Bitcoin effectively.
To better understand what cryptocurrency mining is, let's look at the conventional transaction system in a banking hall or via an online platform.
If you walk into a bank to make payment, such payment is documented by the issuing bank, and you're given a receipt to validate it.
Unlike the physical receipt you get from regular transactions, Bitcoin miners record cryptocurrency transactions in blocks and add them to the blockchain.
A record of blocks entered into the blockchain is maintained by nodes and made available anytime it needs to be verified.
The tasks of Bitcoin miners are two folds. The first is to ensure that every block of a transaction entered on the blockchain is entered accurately.
Then, they are to ensure that transactions are not duplicated to prevent the challenge of counterfeiting the everyday traditional banking system faces.
Many investors have ventured the mining path in Nigeria, and some others are still considering its prospects.
For those outside the workings of Bitcoin mining, the major question has always been - is Bitcoin mining profitable in Nigeria?
Giving a quick and direct answer to this question may not be possible.
As such, this article attempts to reveal some shocking truths about Bitcoin mining in Nigeria.
After going through these truths, you'd be left to decide on the side of the pendulum you want to be on.
Bitcoin Mining in Nigeria
Have you ever wondered why cryptocurrencies are always still in circulation despite the many global demands on them?
Several explanations have been given to this, and one of them is cryptocurrency mining.
Bitcoin has been in existence since 2009 when Satoshi Nakamoto created it, and has since remained in circulation partially because of the activities of crypto miners globally.
Among many other things, Bitcoin mining ensures the steady availability of these coins on the one hand and the effective running of the blockchain on the other.
If you've heard about Bitcoin, Ethereum, and the many other coins that exist, the chances are that you've also heard about blockchain.
The idea of blockchain came at a point where the security of Bitcoin was threatened, counterfeiting was coming up, and criminal activities were skyrocketing.
The introduction of blockchain has revolutionized the crypto space, especially in two major areas - accountability and transparency.
With the blockchain, it is more difficult now than ever for anyone to counterfeit digital coins.
This has made investing in Bitcoins a lot more attractive to new and existing crypto traders.
The blockchain is the starting and central point of all mining activities.
For Bitcoin, it is not enough for a miner to add blocks to the blockchain; the miner also has to solve a mathematical problem to be entitled to the reward that comes with it.
This means that you may successfully add blocks to the chain but fail at solving the problem afterward.
Will you still get the reward that comes with mining crypto?
The simple answer is no, as it is a comprehensive process that must be done as a whole.
So, here's the first surprising truth - you don't get rewarded as a Bitcoin miner simply because you added a block to the chain alone; you must sustain the intelligence of solving complex mathematical solutions that comes after.
The Process of Mining Bitcoins in Nigeria
Instead of waiting till the end, let's start this section with another surprising truth.
The cost of mining Bitcoin is very high, and sophisticated hardware devices are needed to succeed.
What differentiates the mining process employed by one person from that which another person employs is the hardware devices used to facilitate the crypto mining process.
For Bitcoin, the most important hardware you will need to get is the Application-specific Integrated Circuit - hardware designed specifically for Bitcoin mining.
Like it is with other hardware devices, ASICs come in different sizes and variations, both of which affect their price.
You're looking at a budget of between 500,000 - 1,000,000 Naira to get a quality ASIC hardware device at the starting level.
ASICs within this range are always more durable and reliable than others that fall below it. No doubt, this range is a lot of money, but that's not all there is to spend for crypto mining.
Another huge step to consider before venturing into cryptocurrency mining in Nigeria is the electricity consumption required.
Experts have established how cryptocurrency mining consumes a lot of electricity.
For a country like Nigeria, where constant power supply is a challenge, there is a need to consider other means of generating power.
Options available at your disposal include going for non-renewable energy sources like solar or getting a standby generator.
If you're looking to get something quality for the generator, you should be planning to spend nothing less than 30 million Naira purchasing it.
However, before even considering the cost of a generator or other energy sources, you have to think of the cost of electricity when you have it.
To mine one Bitcoin using an electricity supply, you will need about 1,544 kWh. Going by the average cost of a kilowatt, that will be about 88,008 Naira.
Like you will need a hardware device to mine cryptocurrencies, you will also need software that gives you access to the network.
Every digital currency has software that provides access to its network, and until you have this access, it may be difficult to carry out any activity on it, including mining.
For Bitcoin, you can choose from a vast collection of software, depending on your budget.
While some software will require you to pay as low as 250,000 thousand Naira, others may come as high as 1,500,000 Naira.
As a new crypto-miner in Nigeria who cannot afford this cost, you can opt for the many free versions that exist.
The challenge, however, with these free versions is how limited they are in operation and the likelihood of unreliability.
Understanding the process of mining a digital coin is not complete if a thing or two isn't said about the quality of software chosen to access the network.
As a Nigerian, it is normal to always want free things. However, that desire should be controlled when it comes to choosing Bitcoin mining software.
Some of this free software is capable of infiltrating your device with malware that can affect its running.
When choosing a Bitcoin mining software, pay attention to the reliability of the software.
To determine reliability, you have to read through the specifications and features of the software and compare it with others.
Then, you have to ensure the software is secure and third-party access is not granted for the information you will provide.
To What Extent is Bitcoin Mining Profitable in Nigeria?
When you think of the reward of about 6.25 Bitcoins that comes with mining one Bitcoin successfully, it might be difficult for one to say this space isn't profitable.
This becomes more important when you consider the current value of Bitcoin and the many projections of experts about the future of digital coins.
However, before looking at the reward, you must consider the process and the Nigerian environment.
The Bitcoin mining space is capital intensive, meaning not everyone can go there.
While it may appear easy on the outside, the overall cost of becoming a miner is a lot.
You have to put together the cost of the ASIC hardware the device, the Bitcoin network access software you are going for, and the cost of electricity.
You can't choose to go for one of these costs at the expense of the others because one without the other will mean you cannot successfully mine Bitcoin in Nigeria.
Then, you have to think of ancillary costs like getting a good location, hiring and paying employees, and the 30% tax imposed by the Nigerian government on mining activities.
In all these, the most challenging is getting a good location as you are either buying or renting.
If you're buying, you have to go through the complex process of seeking approval from the federal government of Nigeria, which can go either way.
Alternatively, if you have to rent, you will still have to prepare a high budget for that.
Worthy of mention is the role internet speed plays in the benefits of cryptocurrency mining.
Several miners are trying to earn a commission from mining Bitcoin, and the first to solve the mathematical problem is the one who gets the reward.
The volatile nature of crypto regulation in Nigeria is another factor that makes the Bitcoin mining space less profitable.
One regulation from the federal government or the central bank is capable of making a mess of your huge investment into starting Bitcoin mining.
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