Is Bitcoin mining still profitable? The simple answer is it depends.
Like any business, it’s about weighing your potential revenue against your costs. With Bitcoin mining, that’s always a little tricky, partly because the reward – Bitcoin is volatile.
Crypto mining has turned into big business, so there’s obviously plenty of profit to be had. The question is, how profitable is Bitcoin mining?
Price of Bitcoin
When looking at whether or not Bitcoin mining is profitable you’ve got to consider the price of Bitcoin and also factor in what you’re going to do with it.
One of the main characteristics of Bitcoin is that it’s volatile, which means you can earn 12.5 Bitcoin one day at it be worth $85,000, but you could earn the same amount of Bitcoin a few months down the
You may be planning on keeping Bitcoin long-term, in which case it’s difficult to know exactly what the value of your work is.
For now, your costs are in traditional currency though, so to show a profit, your revenue has to have a greater USD value than your expenses – with the fluctuations in value, this is hard to predict.
To get more certainty, many miners use a Bitcoin mining profitability calculator.
Looking to the future, another element you have to consider is the decreasing rewards you receive for mining.
The Bitcoin network has a cap of 21 million coins. As mining is the way new Bitcoins are introduced into the system, this means there’s a limit on how much can be handed out to miners.
To manage the level of supply, Bitcoin rewards are programmed to halve roughly every four years. If you’d been mining back in 2010, this would have meant you received 50 Bitcoin for every block you mined. This number halved in 2012 to become 25 Bitcoin, in 2016 to become 12.5, and again in 2020 to become 6.25.
This will continue to happen in the future, and the reward will be halved again in 2024 to become 3.125 Bitcoin.
You have to weigh this against the value of Bitcoin. In October 2017, 12.5 Bitcoin was worth around $72,500, in October 2021, 6.25 Bitcoin was worth $390,000. The rewards may be going down in Bitcoin terms, but it really depends on the value of the coins.
Is Bitcoin mining still profitable? The rewards may have decreased in terms of Bitcoin, but in real terms, they’re greater than ever.
Cost of Computer Systems
Mining is basically a big competition by miners around the world to solve complex equations. To do this, they have to have a huge amount of computing power at their disposal, and this costs money.
Getting started takes investment – the more powerful your hardware, the more profitable you will be, but the prices reflect this.
Ultimately, if you don’t have the right hardware, you’re not going to earn money, so this is a none-negotiable.
Though there is plenty of value still in Bitcoin mining, the barriers to entry are getting greater. The more computational power you need, the more it’s likely to cost you to invest in the computer systems you need, and the more power is concentrated in the hands of organizations with the greatest resources.
Cost of Electricity
When you talk to anyone about crypto, two of the first things that are likely to come up are volatility and energy consumption. The simple fact is it takes a huge amount of electricity to mine Bitcoin.
One variable that has a big impact on the question of whether bitcoin mining is still profitable is the cost of electricity.
In our recent article about China’s crypto ban, we discussed some of the difficulties with getting a consistent supply of electricity. In the winter, there’s excess energy from hydropower which suits crypto miners, but in the summer this source disappears, causing them to turn to fossil fuels (horrible for the environment, and perhaps a small part of the reason for the China ban).
In the US, the energy supply is much more dependable, and agreements are being made to make Bitcoin mining cleaner. However, your profits are still heavily dependent on the cost of your energy, which, like the value of Bitcoin, can change dramatically.
Electricity rates will be a key aspect of how profitable Bitcoin mining is.
Your costs aren’t just dictated by electricity costs, they also depend on how much energy you use.
These processes are highly energy-intensive, which means there’s a lot of room for optimization. This is where your ability to innovate and improve your infrastructure comes in.
By investing in infrastructure such as BLOQPODs and BLOQ PARKS, you can make your operations much more efficient, and maximize your profitability.
There are too many variables to ask is Bitcoin mining profitable. You’ve got to look at every detail, and the infrastructure you set up is a huge part of this.
The complexity of each block isn’t the same. Different blocks become harder or easier to solve based on the hash rate – the number of attempts to find a new block that are made each second.
The more miners there are competing to solve a block, and the more computation power there is in the system, the harder the equations become to solve. This is designed to keep a consistent number of blocks being mined each day, regulating the entire system.
As more people get into mining, and as the computing power in the system increase, the more difficult it becomes to solve the equations and win the reward. This means it’s something of a computing arms race. You’ve constantly got to improve your processes to give yourself the best chance of earning a profit.
On the face of it, there’s still a lot of money coming out of Bitcoin mining. Around 144 blocks are mined every day, each with a payout of 6.25 Bitcoin, which at today’s exchange equates to a value of $60.26 million.
If you were able to mine just one of those blocks, that’s over $418,000.
Mining has changed a lot since the early days of Bitcoin when individuals could use their personal computers to mine. Today, there’s lots of competition to mine each block, and dedicated mining hardware now allows people to do it much more effectively.
The more computational power you have, the more solutions you’re likely to find, enabling you to collect the Bitcoin block reward. As greater computational power means a better chance of mining each block, individual miners band together in what’s known as a mining pool.
Miners pay a fee to be a part of the pool and rewards are then shared between the miners based on the hash rate they contribute.
Conclusion: Is Bitcoin Mining Still Profitable?
This is a difficult question to answer because it depends on how you go about it.
There is huge value still left in Bitcoin mining, but you need to make a big investment before you can start to see the profits. The Bitcoin mining industry is hugely competitive and there are many variables that affect profitability.
It’s not easy to make a profit through mining Bitcoin, but if you make smart investments, and plan ahead, there’s still lots of money to be made.