What Does it Mean to “Harvest” Bitcoin?

• Blockchain Council
• September 10, 2024

Bitcoin doesn’t need an introduction to the crypto community. But are you familiar with harvesting bitcoins?

While the term “harvest” is more commonly associated with agriculture, it has been adopted in the cryptocurrency world.

What Does it Mean to “Harvest” Bitcoin?

The term “harvest” Bitcoin generally refers to the collection of Bitcoin rewards after successfully mining a block. Just as a farmer gathers crops after they mature, Bitcoin miners collect Bitcoin as a reward for their computational efforts. However, unlike farming, Bitcoin harvesting requires no physical labor; instead, it relies on computational power and electricity.

The primary tools for harvesting Bitcoin are high-performance computers called mining rigs. These machines are designed to perform the high-intensity calculations required to solve the cryptographic puzzles that protect the Bitcoin network. The more computing power a miner has, the better their chances of successfully mining a block and “harvesting’ Bitcoin.

Harvesting can involve different strategies, such as using software to automate the process of collecting small amounts of Bitcoin (commonly known as “Bitcoin faucets”), participating in cloud mining, or joining a mining pool.

There are two main contexts in which this term is used: mining and investing.

What Is Bitcoin Mining?

Bitcoin mining is how new Bitcoins are created and added to the total supply. It uses special computer equipment to solve tough math problems. A new block is added to the Bitcoin Blockchain once these problems are solved, and the miner gets a reward in Bitcoin. This reward is called the block subsidy. It decreases over time due to an event called the “halving,” which we’ll touch on later.

The term “harvesting” in the context of mining often refers to the strategies that miners use to collect and maximize their Bitcoin rewards. This includes:

• Timing and Location: Miners may set up operations in regions where electricity costs are low, as energy is a significant expense in Bitcoin mining. By minimizing costs, miners can harvest more Bitcoin profitably.
• Halving Events: Bitcoin experiences a halving about every four years, cutting the reward miners get in half. For example, in April 2024, the reward was cut from 6.25 to 3.125 Bitcoin per block. Miners often plan their operations around these events, as they affect the overall profitability of mining​.
• Technological Upgrades: Miners continuously seek more efficient hardware to lower operational costs and increase their chances of successfully mining a block. This is part of the “harvesting” plan to gather as much Bitcoin as possible before the next halving cuts the rewards again.

Harvesting Bitcoin Through Investing

On the investment side, “harvesting” Bitcoin refers to strategies used by investors to accumulate Bitcoin during market fluctuations:

• Market Timing: Just as farmers harvest crops when they are ripe, investors aim to buy Bitcoin when prices are low and sell when they are high. This approach needs close market tracking, recognize price trends, and forecast future changes.
• Dollar-Cost Averaging (DCA): Some investors “harvest” Bitcoin by using dollar-cost averaging. This means buying a set amount of Bitcoin at regular times, no matter the price. This strategy reduces the risk of making a large purchase at a high price and allows investors to accumulate Bitcoin steadily over time.
• Hodling: “Hodling” means keeping Bitcoin for the long term, no matter how the market fluctuates. This can be seen as a form of harvesting, where the investor waits for the “crop” (Bitcoin) to mature in value over several years before selling.

More Ways to Harvest Bitcoin

Getting Paid in Bitcoin

Another way to harvest Bitcoin is by earning it as payment for services or products. Some companies, particularly in the tech and cryptocurrency industries, offer to pay employees in Bitcoin. This method lets you collect Bitcoin without buying it directly from an exchange.

For freelancers and contractors, this can be an easy way to start building a Bitcoin portfolio, especially if they work in a sector where Bitcoin payments are common.

Affiliate Programs

Affiliate programs offer a way to earn Bitcoin by referring others to Bitcoin-related services or products. Many platforms, such as exchanges or Bitcoin wallets, provide commissions in Bitcoin when someone you refer makes a purchase or signs up. This is a low-effort method that can slowly build your Bitcoin holdings over time​.

Staking and Yield Farming

While not applicable to Bitcoin directly, staking and yield farming are common in other cryptocurrencies and can be considered forms of harvesting in the broader crypto ecosystem. These methods require you to lock up your crypto assets in a network to earn rewards, often given as additional crypto.

Risks and Considerations

While Bitcoin harvesting can be a less resource-intensive way to accumulate the cryptocurrency, it does come with risks. Cloud mining contracts, for example, can be vulnerable to fraud, and the profitability of these contracts can vary significantly depending on the price of Bitcoin and the difficulty of mining. Similarly, joining a mining pool might yield more frequent rewards, but those rewards are usually smaller compared to solo mining.

Moreover, the overall profitability of any form of Bitcoin harvesting is heavily influenced by the fluctuating price of Bitcoin, electricity costs (in the case of traditional mining), and the potential for technological advancements that could render current mining hardware obsolete. To survive in the volatility of the market, consider becoming a certified professional by enrolling into industry-recommended cryptocurrency programs like the Certified Bitcoin Expert™.

Conclusion

Harvesting Bitcoin is a broader term that can refer to various methods of accumulating the cryptocurrency. However, as with any investment or venture in the cryptocurrency space, it’s essential to approach Bitcoin harvesting with caution, thoroughly researching any service or method before committing time or resources.