Bitcoin price rises as gold rush revives

     Beijing time, January 8 afternoon news, rising prices have boosted the resurgence of the virtual currency business. Now, Bitcoin mining looks attractive again.

When the virtual currency Bitcoin became popular a few years ago, almost anyone could get a computer in their basement and start mining Bitcoin. Mining is necessary to record transactions and ensure the circulation of digital currency. Bitcoin exists in the form of software. Miners use their computers to solve complex computing problems (of course, they have to pay for computer hardware and high electricity bills), and they are rewarded with new Bitcoins. The price of Bitcoin has risen from $13 per Bitcoin to $1,137 per Bitcoin in 2013 in less than two years, and some people have become paper millionaires from Bitcoin mining. After the peak of the price increase, the price of Bitcoin fell to $183 last year. As a result, only major miners with large resources continue to mine Bitcoin after the price of Bitcoin fell. Many people find it more profitable to join a mining pool or a mining organization, because mining pools and mining organizations can share computing power to obtain Bitcoin more quickly and efficiently.

Now there are signs that widespread bitcoin mining is back, as the price of bitcoin has doubled since September. While bitcoin’s price isn’t the only factor in determining whether mining is profitable, it’s an important one.

“When the price of bitcoin goes up, people have more confidence in bitcoin mining, and mining equipment manufacturers will design the next generation of chips for mining,” said Bobby Lee, CEO of Shanghai-based bitcoin exchange BTCC, which also works with the world’s second-largest bitcoin mining pool. “For those who have already bought mining equipment, their return on investment will increase.”

Genesis Mining, a mining equipment supplier that has 130,000 miners who have purchased the company's huge computing services on mining hardware, said that mining is now more rewarding. In November, an investment of $419 could return $2.42, compared with $1.14 for every $419 invested in September. When the price of Bitcoin was higher, a miner could recover his investment in six months, instead of more than a year.

“In the case of price increases, we can see demand go up by two times, sometimes even more,” said Marco Streng, CEO of Genesis Mining.

But mining is a risky endeavor. Bitcoin’s price is highly volatile. In addition, this year the bitcoin software will halve the number of bitcoins that are rewarded for mining (a result of bitcoin’s built-in supply management system). At the same time, miners will need more powerful, more expensive equipment to keep up with the processing power needed to mine bitcoins.

Regardless, by now, mining organizations are getting stronger. BTCC has noticed a doubling of computing power in its mining pools in the past six months.

“Everyone in the mining pool is making money because those who didn’t make money before are not mining,” said the BTCC CEO.