Calculating the Profitability of Bitcoin Mining


Due to the volatility of the general market, the actual profitability of Bitcoin (BTC) mining is always in flux. With Bitcoin having such a high difficulty and large total hashrate, it is often difficult to tell whether engaging in Bitcoin mining is worth the time and the effort. If you are considering setting yourself up as a Bitcoin miner, there are many things you need to think about.

Key Factors in Determining Profitability

Here are some major factors that you should take into account when judging whether Bitcoin mining is worth it:

  • Cost of Bitcoin ASIC miner(s)
  • Cost of electricity to power miner (how much you are charged per kwh)
  • Cost of equipment to run the miner(s)
  • Cost of PSU (power supply unit)
  • Cost of network gear
  • Cost of internet access
  • Costs of other supporting gear like shelving, racks, cables, etc.
  • Cost of building or data centre if applicable
  • Key value of BTC over the life of the miner

Considering all of these factors will give you a rough estimate of when you can expect to break even on your expenses. From that point on, you will begin to see a return on investment (ROI) from your mining earnings. Several of these costs are recurring, such as power, internet and building / data centre costs if applicable.

Side note: Bitcoin is less usable as actual money due to much higher fees and delayed transaction times. The Core team has also expressed an interest in keeping these fees high since they view BTC as a "store-of-value" and not something to be transacted on a daily basis. In contrast to this, Bitcoin Cash's transaction fees cost pennies and payments can be validated even with zero confirmations. These facts make BCH the ideal cryptocurrency for sending and receiving money anywhere in the world.

Getting your ROI

As noted above, the key to achieving a return on your investment is the value of Bitcoin. As we all know, the price of BTC is very volatile and can change with extreme swings, which can make calculating profitability problematic at times. As a BTC miner, your goal is to mine Bitcoin at its current value as efficiently as possible. This means buying the most up to date equipment to mine with, unless you can get some ASIC that is a generation or so back that is cheap enough and still makes more in Bitcoin than it costs in electricity. Newest gen Bitcoin ASIC miners are usually more powerful using less power per gh/s.

If you are taking less of a share of the block rewards due to rising total hashrate, this can - paired with a rising difficulty - eat into your potential profits. The difficulty goes up or down based on how fast or slow block times are.

Block Times Explained

Block times are the time it takes for a transaction set to be recorded and the hash created on the blockchain. Bitcoin targets for a ~10 minute block time and will reset roughly every two weeks based on the average time to solve (process) a block. If in the time period more miners are added to the network that allows a block to be solved in less than ~10 minutes, the difficulty will go up to slow the block generation to ~10 minutes.

If enough hashrate has left the network and blocks are being solved in more than ~10 minutes the difficulty will drop, allowing the miners to process blocks in roughly ~10 minute intervals. Ideally you would want the hashrate to be fairly stable as that will keep the amount of bitcoin you receive for mining roughly the same. If the BTC value holds steady or goes up as well it will help as well.

Mining with has launched it's own pool mining operation along with cloud mining contracts with competitive pricing, which you can register for and begin mining today. Before you do, we recommend checking out a great third-party tool made by Grey Wyvern to estimate the return on your investment on the Bitcoin Pool based on several variables the user can input, which will calculate profitability.

Final Thoughts

As we have established, the profitability of Bitcoin mining is a moving target, so vigilance in monitoring your costs each month is essential to mine rewards and their value at the time of receiving.

Keep an eye on mining pool fees, as some are free and others are not, with a percentage or more added into the cost of your mining. The higher BTC’s value goes, the longer you can run your mining gear profitably as long as the total hashrate does not keep rising, causing the difficulty to keep your earnings even or even down as time goes by.

While running your own mining equipment can be fun and at times profitable, it is not always something you can do at home. Miners generate plenty of heat and noise, which needs to be taken into account for where you are going to place your miners. Most cannot be run in the house unless you have a garage, basement or room that can handle the heat and noise. In this case you may want to host your miners in a data centre or some other suitable place.

If you want to be able to mine without the hassle of the physical miners themselves, you can use a cloud mining or hosting service. If you begin mining on the mining pool and have questions on getting started, fees, or payouts, simply login and head over to the Getting Started page to read some common questions and answers, or get involved in the community forum with other miners.

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