Methodology
The Bitcoin mining profitability calculator is designed to provide crypto users with an estimate of potential profits or losses from mining Bitcoin (BTC) or Bitcoin Cash (BCH) since both blockchains share the same SHA-256 proof-of-work algorithm.
It takes into account various factors such as electricity costs, hardware efficiency, current market prices, and network conditions to compute these estimates and provide you with Bitcoin miner profitability information and charts.
Key Components
- Electricity Cost (USD/kWh): The cost per kilowatt-hour of electricity for calculating operational costs.
- Power Consumption (kW): The amount of power your mining hardware consumes, directly affecting electricity costs.
- Price (USD): The current market price of Bitcoin (BTC) or Bitcoin Cash (BCH), which impacts revenue calculations.
- Median Transaction Fee (USD): The median transaction fee in the network, which contributes to miner revenue.
- Daily Transactions: The number of transactions processed in the network per day.
- Network Hashrate (EH/s): The total computational power of the Bitcoin or Bitcoin Cash network, which determines your share of the block reward.
- Block Reward: The number of coins awarded for mining a block, currently set at 3.125 BTC and BCH per block until the next halving.
- Mining Rig Hashrate (TH/s): The computational power of your mining equipment, measured in Terahashes per second.
- Hardware Cost (USD): The initial cost of the mining hardware machine.
- Hardware Lifespan (days): The expected operational life of your mining hardware machine.
- Pool Fee (%): The fee charged by mining pools for managing pooled mining costs.
Earnings Breakdown
To figure out how much money you make from Bitcoin mining per day, we look at a few things. First, we check how much you spend on electricity. Then, we see how much of the total mining power you have compared to everyone else.
This helps us estimate your share of the mining rewards. Next, we calculate your earnings from these rewards and any transaction fees you might get. We adjust this amount by taking out any fees you pay to the mining pool.
Finally, we subtract your daily costs, like electricity and a portion of your equipment cost, to see if you're making a profit or a loss each day mining Bitcoin.
Assumptions
The Bitcoin mining profitability calculator makes assumptions for various mining operations (individual, small, and large) regarding hardware, costs, power, and hashrate, all of which can be customized. It also assumes future prices and hashrate.
It uses assumptions that may not reflect current market conditions or technological advancements like new mining hardware and immersion cooling. Electricity costs can vary, and miners can negotiate prices or use renewable energy.
Recently, large mining operations have been renting out facilities to artificial intelligence operations to share and reduce costs. The calculator does not account for additional overhead such as infrastructure, staffing, security, maintenance, and insurance.
It also doesn't calculate block rewards, as these are random and not guaranteed. If you mine a block, rewards will be higher depending on the block reward and market prices.
Additional Information
Bitcoin mining can still be profitable if you have efficient and cost-effective mining machines. The two biggest factors affecting profitability are electricity costs and power consumption.
Mining with low electricity costs or supplementing with renewable energy can be key to making profits. Investing in new, efficient machines, including effective cooling systems, is critical.
For example, just take a look at the Bitcoin mining stocks, there are many big miners who are able to scale while being efficient to make a profit.
Did you know that solo (individual) miners have less than a 1% chance of winning a block reward? So, it's advisable for individual miners to join a mining pool with reasonable fees. By joining a pool, miners combine their hashrate with others,
increasing their chances of earning a share of the block reward. While the pool's overall probability of finding a block is higher, individual miners receive smaller, more frequent payouts based on their contribution.
Another option instead of mining is to just buy Bitcoin, where the risks and total investment and ROI may be better. Overall, Bitcoin mining is somewhat like playing the lottery
- it's random, but with the right strategy, you can still make a profit. However, it's important to manage expectations and not assume you'll become rich overnight.
