Much has been made of large pools taking over the mining space, notably with regards to Bitcoin. Of particular note is the fact that the most advanced mining rigs often become available to these enterprise operations months before they can be purchased by independent consumers. For example, critics have long accused Bitmain of using its most cutting edge equipment exclusively for its own mining farms and selling only the older rigs on the open market.
Thus, successful Bitcoin and crypto mining requires a very close eye for detail. Efficiency must be a top priority, as every variable will play a role in the final outcome. This includes equipment costs, electricity costs, and choice of platform to mine. However, with proper planning, and access to the best information, profitability can be achieved.
What do you think is the price to build a profitable bitcoin mining rig? Let us know in the comments below.
Images via Shutterstock, Poolin
- Is Bitcoin Mining Profitable In 2021?
- Swyftx Review 2022 | Finest Crypto Currency Exchange for Australia MarketHow Much Money Can You Make From Crypto Mining
- 3. Notable Mining Hardware Companies
- Bitmain Technologies
- Canaan Creative
- Innosilicon Technology
- GMO Internet
- Zhejiang Ebang Communication
- Does Crypto Mining Wear Out Your Hardware Faster?
- How Much Do Bitcoin Miners Make in 2019?
- Scenario 1
- Scenario 2
- Can I mine Bitcoin on my phone?
- What Is The Best Cryptocurrency Mining App?
- Earn Money From
- Factors That Affect Mining Profitability
- Quick Tip
- Initial Investment
- QUICK TIP
- Block Rewards and Transaction Fees
- Block Difficulty
- QUICK TIP
- QUICK TIP
- Electricity Cost
- Profitability of Bitcoin mining on iPhone and iPad
- Bitcoin Mining Set-Up Examples
- GTX 1080 Ti
- Antminer S9 Bitcoin Miner
- 7. Conclusion: Which is the best Bitcoin miner?
- Calculating Potential Profits From Crypto Mining
Is Bitcoin Mining Profitable In 2021?
Is mining bitcoin worth it in 2021? This is the question I often hear lately.
Again, bitcoin mining is the process of earning bitcoins in exchange for running the verification process to validate bitcoin transactions.
These transactions provide security for the bitcoin network and compensate the miners by giving them bitcoins.
Is mining bitcoin still profitable? There are several factors that determine whether Bitcoin mining is profitable including electricity costs, availability and price of bitcoin, computer rigs and their computing power, and difficulty in providing the services. You have to know the cost of mining to determine its profitability.
The bitcoin mining difficulty is measured in the hashes per second of the bitcoin validation transaction and the hash rate measures the rate of solving the problem. But the difficulty changes as more miners join the pool. And when more miners join, the difficulty increases to ensure that the level is static.
Aside from that, bitcoin mining uses computing rigs which include expensive hardware. To know if the process is profitable, you have to consider the costs and difficulty and the price of bitcoin that you will be receiving as potential rewards.
So, is bitcoin mining profitable? In general, the revenue from mining outweighs the costs and the investment into mining hardware. Yes, bitcoin mining is still profitable even in 2021.
A profitability trend was observed in April by the miners when bitcoin was trading at nearly double its current level, according to Glassnode’s analysis.
Some Chinese miners have been selling their mining computers or rigs at discounted prices due to the competition in the business. However, the remaining miners continue to enjoy profitability boosts until the infrastructure catches up, according to industry experts.
The active bitcoin miners’ profitability doubled after a 28% downward difficulty adjustment in July, Nasdaq reported. The North American hash spread an index invented by digital asset financial services platform BitOoda to measure the difference between bitcoin mining revenue per megawatt-hour and the cost of the needed power and learned that it had almost doubled to $449 from $225 at the time.
“Mining economics have improved significantly,” Sam Doctor, chief strategy officer at BitOoda, wrote in a newsletter.
If you want to try mining bitcoin, don’t hesitate because it is still profitable.
“It’s become both easier and more profitable to mine bitcoin,” said Nick Spanos, co-founder of Zap Protocol, an infrastructure provider for decentralized apps. “That’s a recipe for enticing more miners back in.”
However, if you are an environmentalist, bitcoin mining or cryptocurrency mining might not be appealing to you due to its energy demands.
Although bitcoins are a digital currency, it requires huge energy. The bitcoin mining process alone uses too much power which is why electricity prices are critical factors.
Producing bitcoins generate between 22 and 22.9 million metric tons of carbon dioxide emissions a year which is between the levels produced by Jordan and Sri Lanka, according to a 2019 study in scientific journal Joule, NBC News reported.
Due to bitcoins carbon footprint, Elon Musk, Tesla and SpaceX CEO, decided not to accept bitcoin due to its energy demands.
In May, Musk released a statement about Tesla & Bitcoin on Twitter.
“Tesla has suspended vehicle purchase using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” the statement read.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment. Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
Swyftx Review 2022 | Finest Crypto Currency Exchange for Australia MarketHow Much Money Can You Make From Crypto Mining
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From beginners to seasoned traders, Swyftx is ideal for anyone in Australia looking for a low-fee crypto trading platform with over 310+ coins. Cryptocurrency is an essential financial investment tool to diversify your portfolio in changing times, and Swyftx can assist you get into the marketplace.
3. Notable Mining Hardware Companies
The most well-known mining hardware manufacturer around, Bitmain was founded in 2013 in China and today has offices in several countries around the world.
The company developed the Antminer, a series of ASIC miners dedicated to mining cryptocurrencies such as Bitcoin, Litecoin, and Dash.
Bitmain is also in charge of two of the largest mining pools around: BTC.com and Antpool.
While Bitmain is respected for its technical excellence and reliable delivery, the company is also criticized by many Bitcoin enthusiasts for a variety of reasons:
- Its monopolization of ASIC manufacturing and mining
- Its role in delaying the SegWit upgrade to Bitcoin
- Its support and promotion of Bitcoin Cash
- Its alleged anti-competitive practices
- Its questionable methods, such as the Antbleed vulnerability and the covert AsicBoost scandal
It’s likely that the bulk of mining equipment today consists of Bitmain miners, based on analysis placing Bitmain’s share of the ASIC market at 70%–80%.
However, since these controversial events and some setbacks and closures, Bitmain has adopted a less aggressive business strategy. It’s likely that the bulk of mining equipment today consists of Bitmain miners, based onanalysisplacing Bitmain’s share of the ASIC market at 60%–70%.
MicroBTor Bit Micro is a relative newcomer to the space but a successful one; they sold 650,000 ASICs in 2019 and are shaping up to be a strong rival to Bitmain and Canaan. They are based in China, specifically the tech production hotspot of Shenzen.
MicroBT manufactures the Whatsminer range of ASICs, and have so far produced 5 series in this range: the Whatsminer D1, M10, M20, M21, and the current generation M30.
The company has certainly enjoyed a strong start, released some competitive products, and it will be exciting to follow their development.
Canaan was founded in 2013 in Beijing by N.G. Zhang. Canaan began as a producer of FPGAs, the mining hardware that preceded ASICs.
In November of 2019, Canaan raised a total of $90 million by listing on the Nasdaq, a tech-focused stock market in the USA. Canaan was the first ASIC manufacturer to list publicly.
Canaan is the world’s second-largest ASIC producer. The company has a wealth of experience in electronic design and production. It’s clear that this veteran industry player has big plans for its future.
Innosilicon is a hardware company with design teams in China and North America, Innosilicon pride themselves on providing low cost, high-performance, fully customizable solutions combined with award winning customer design support.
Their IP can be found in millions of mobile, multimedia and consumer electronic devices such as: tablets, cell phones, HD set-top boxes, TV, cameras, network devices, computing ICs that have achieved leading market shares.
The company has entered the cryptocurrency mining market and introduced the Terminator series for mining Bitcoin, with their latest miner being the T3+ Pro.
*June 2020 update: Due to lack of profitability, GMO Internet hasstopped producing mining hardware.
Japanese giant GMO Internet has also introduced a line of Bitcoin miners.
While GMO Internet is mainly engaged in the Internet infrastructure business, it also runs other businesses such as online advertising & media, Internet financial services, mobile entertainment, and of course cryptocurrency.
The company has also launched several crypto exchanges and it runs a mining business and cloud mining contracts.
Zhejiang Ebang Communication
Ebang mainly engages in R&D, manufacture and sales of fiber optical telecommunication products. The company is also one of the largest ASIC chip manufacturers in their region. Ebang miners carry the Ebit brand.
On April 2020Ebang filed for an IPO on the U.S stock market listing, so the company definitely has big plans for the future.
Bitfury is a veteran Bitcoin hardware and software company formed back in 2011. The company conducts large-scale mining operations on its own and has been known to account for large amounts of the Bitcoin network hashrate.
The company offers several products including an ASIC mining chip called Clarke, an enterprise grade Bitcoin mining server called Tardis and a portable Bitcoin mining data center called BlockBox.
The company has data center operations in Iceland, the Republic of Georgia, Canada and Norway, which process and transmit bitcoin transactions.
The blockbox ac by Bitfury
Does Crypto Mining Wear Out Your Hardware Faster?
A misconception prevalent among those new to crypto mining is that the process has the potential to wear out your hardware faster. However, the truth is far more nuanced than that. Take an alternative use-case for graphics cards such as gaming, for instance.
While gaming, your GPU is constantly forced to ramp up and down the amount of power it draws depending on the scene it is rendering. This results in the GPU chip experiencing thermal spikes and the fans on the card ramping up or down depending on the workload.
Mining, on the other hand, applies a consistent load on your hardware. This keeps the GPU at a consistent temperature. Furthermore, since you will likely undervolt or power limit the card, the chances are that it will produce less heat than while gaming.
How Much Do Bitcoin Miners Make in 2019?
Considering general, long-term costs and profitability (featured in the section above) are important. Still, people want to understand what profitability looks like in the short-term. The simple answer is that BTC profitability (as of late April 2019) is bleak. This is due to the relatively low value of BTC when compared to that of the previous bull market of 2017. Of course, this could always change at any point in time if the value of BTC were to increase. To put 2019 profitability into better perspective, it’s good to use a real-world scenario based upon realistic factors.
In this scenario, let’s say a miner wanted to use the Bitmain Antminer S9. Note that by changing to a different mining rig, the results will vary but just slightly. The Antminer S9 has a higher hash rate (14.0 TH/s) and power consumption of 1350 W than many competitors.
As most crypto miners do, it’s likely that you would join a mining pool. Fees with this can vary, but one percent is considered to be standard.
Finally, the cost of electricity is the most vital expense to factor in. If we look at states within the US, for example, net returns or losses depend heavily on these rates. Oklahoma, for instance, has the lowest average electric cost at $0.088 kWh as of January 2019. Based upon April 2019 BTC prices, it would take some time to get any return on investment.
Although this calculation in the graphic below shows an estimated return of $1.56 per month, it doesn’t include the cost of this particular mining rig (~$3,000). Assuming that BTC prices remained the same (~$ 5,325), it would take over 162 years to get to profitability, even in the place with the cheapest electric costs in the US. This doesn’t even factor in the possibility of rising electric costs over time.
This profitability calculator doesn’t include the upfront costs of buying the mining rig. With a Bitmain Antminer S9, for example, it would take over 162 years to reach ROI if the value of 1 BTC remained at $5,325.54.
In Scenario 2, let’s keep all of the above factors in Scenario 1 the same besides location/electric cost. By opting to mine in Hawaii, the state with the most expensive electric costs at an average of $0.3209 KWh, you would be running a deficit of $224.82 per month. This doesn’t even include the cost of the mining rig. Thus, it would be nearly impossible to reach profitability in Hawaii, even if the value of BTC increases significantly.
Can I mine Bitcoin on my phone?
Crypto mobile mining – does it work? Yes, it does work. It is possible to mine bitcoin with an android device even if you might have numerous reasons to stay away from it. Also, using a mobile phone to mine crypto coins isn’t close to the way the traditional mining software or hardware works.
Even with multiple single high-end GPUs, you likely wouldn’t mine any Ethereum before proof of work mining ends. The theoretical benefit to solo mining is that you get the whole block reward plus fees, with no percentage going to the pool. The downside is that without a massive farm, you’ll most likely end up getting nothing. The easiest is to use the new QuickMiner, which is a web interface to a basic mining solution. You download the QuickMiner software, run that, and the webpage allows you to start and stop bitcoinczechia.com mining — you don’t even need to put in your BTC address. For example, in a brief test QuickMiner suggested it was earning over $7 per day , and noted we “could be making 16% more” by using NiceHashMiner (which we’ll get to next).
What Is The Best Cryptocurrency Mining App?
In years past, miners would pack up their gear and truck it to either Xinjiang or Inner Mongolia to tap into the electricity generated by coal-powered plants. From there, according to Ben, the local government calls the power plant directly to investigate the allegation. Data from Chinese cybersecurity company Qihoo 360 shows that underground crypto mining appears to be alive and well in China. In a November report, the research group estimated that there are an average of 109,000 active crypto mining IP addresses in China on a daily basis. Most of those addresses, according to the report, are in the provinces of Guangdong, Jiangsu, Zhejiang, and Shandong.
In just the past year, Bitcoin has traded for less than $10,000 and nearly $67,000. This kind of volatility makes it difficult for miners to know if their reward will outweigh the high costs of mining. If a miner is able to successfully add a block to the blockchain, they will receive 6.25 bitcoins as a reward. The reward amount is cut in half roughly every four years, or every 210,000 blocks. As of November 2021, bitcoin traded at around $66,000, making 6.25 bitcoins worth more than $400,000.
Earn Money From
Either way, the maximum fan speed you see in this scenario is where the manufacturer thinks the card should last 3+ years. Anything above that and you’re more likely to have the fans at least fail. Temperatures — for all components, not just the GPU core — and fan speeds are a good indicator of what’s safe for long-term use, so let’s start there. A lot depends on the specific card and fan design, but consumer GPU fans absolutely are not designed to run at % fan speed and C temperatures for constant 24/7 use. In fact, on many GPUs the maximum fan speed is normally limited to around 50%.
Cryptocurrency mining, how it works, the best mining apps, and whether it’s a profitable business model in 2022. Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured http://bitcoinczechia.com/ placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
Factors That Affect Mining Profitability
Mining can be an effective way to generate passive income. However, there are numerous factors that affect mining profitability, and often times they are out of your control.
Some seem to believe they will be able to quit their nine-to-five job after investing in a few Bitcoin miners – unfortunately, that is not necessarily the case.
How do you know if mining is right for you?
It is important to understand the constantly changing dynamics that play into mining profitability, especially before you invest your hard-earned money. Nevertheless, a proper passive income can be generated if you play your cards right. Let’s explore the factors that you need to consider before you buy mining hardware:
Mining or buying bitcoins? You can’t do either without a Bitcoin wallet.
Our guide on the best bitcoin wallets will help you pick one. Read it here! Once you find one you like, you can learn how toadd your mining funds to your wallet.
The initial investment in efficient mining hardware is probably one of the things keeping you from pulling the trigger, and for good reason. Mining hardware is expensive!
In actuality, the high cost of dedicated mining hardware ASICs (Application Specific Integrated Circuits) is largely to blame for the centralization of Bitcoin mining in China.
You can also mine litecoin with Bitcoin mining machines, but its usually just best to buy litecoin from an exchange.
In case you were not aware, the vast majority of mining operations are in China, primarily because of cheap electricity (more on that later.) Since ASICs are expensive, many average consumers do not have the capital to invest.
Large mining corporations operate mining farms with thousands of ASICs. The average Joe can’t even afford one ASIC, much less thousands of them.
Instead of mining being spread out across the world, the validation process is controlled by fewer people than first anticipated upon Bitcoin’s inception.
ASICs’ impact on Bitcoin aside, it is important to determine your ROI timeline before investing. Some hardware might not pay itself off at all. The additional factors below are largely responsible for determining your ROI period.
You can use the calculator above to determine your projected earnings based on the ASIC you’re using, and your electricity cost.
Block Rewards and Transaction Fees
Every time a block is validated, the person who contributed the necessary computational power is given a block reward in the form of new-minted BTC and transaction fees.
Bitcoin’s block time is roughly 10 minutes. Every 10 minutes or so, a block is verified and a block reward is issued to the miner. When Bitcoin was first created, miners received 50 BTC for verifying a block. Every 210,000 blocks – roughly 4 years – the amount of BTC in the block reward halves.
50 BTC per block may seem high, but it is important to consider the price of Bitcoin at that time was much less than it is today. As the Bitcoin block reward continues to halve, the value of Bitcoin is predicted to increase. So far, that trend has remained true.
First, the amount of newly minted BTC (often referred to as coinbase, not to be confused with the Coinbase exchange) halved to 25 BTC, and the current coinbase reward is 12.5 BTC. Eventually, there will be a circulating supply of 21 million BTC and coinbase rewards will cease to exist.
If BTC is no longer minted, mining won’t be profitable anymore, right?
Bitcoin transaction fees are issued to miners as an incentive to continue validating the network. By the time 21 million BTC has been minted, transaction volume on the network will have increased significantly and miners’ profitability will remain roughly the same.
Of course, block rewards have a direct impact on your mining profitability, as does the value of BTC – since the value of BTC is volatile, block rewards will vary. Additionally, successfully confirming a block is the only way you will generate any revenue whatsoever by mining.
On a simple level, hashrate is the way we measure how much computing power everyone around the world is contributing toward mining Bitcoin. Miners use their computer processing power to secure the network, record all of the Bitcoin transactions and get rewarded in bitcoin for their efforts.
The higher the hashrate of one individual Bitcoin mining machine, the more bitcoin that machine will mine. The higher the hashrate of the entire Bitcoin network, the more machines there are in total and the more difficult it is to mine Bitcoin.
At the end of the day, mining is a competitive market.
Another way of looking at it, is that hashrate is a measure of how healthy the Bitcoin network is.
It’s good for Bitcoin if the overall hashrate is high, because it makes the network more secure. Somebody who wanted to attack Bitcoin would need at least 51% of all the hashrate in the world and that gets pretty expensive when there are millions of mining machines running.
It’s also healthy if those machines are being operated in different countries by different people, because it means it would be very hard for the entire network to be shut down. Bitcoin is like a many headed hydra, at this point in time it is more or less unstoppable.
OK, but what does hashing actually mean?
Underneath the hood, Bitcoin mining is a bit like playing the lottery. Roughly every 10 minutes the Bitcoin code creates a ‘target’ number that the mining machines try to guess.
Typically we call this finding the next block. Like many things connected to Bitcoin this is an analogy to help things be a little bit easier to understand. The deeper you go into the Bitcoin topic, the more you realize there is to learn.
Whichever machine guesses the target number first earns the mining reward, which is currently 6.25 BTC. They also earn the transaction fees that people spent sending bitcoin to each other.
Just like winning the lottery, the chances of picking the right hash is extremely low. However, modern bitcoin mining machines have a big advantage over a person playing the lottery. The machines can make an awful lot of guesses. Trillions per second. Each guess is a hash, and the amount of guesses the machine can make is its hashrate.
Is hashrate just a Bitcoin thing?
No. Other cryptocurrencies, like Litecoin, that use mining to support and secure their networks can be measured in hashrate. However, different coins have different mining algorithms which means that the chance of a mining machine guessing the target, writing the block onto the blockchain and getting the reward is different from one cryptocurrency to the next.
We can still compare the amount of hashrate between two different cryptocurrencies, and the Bitcoin network has a lot more computing power than all the other currencies put together. This is why it’s pretty easy to argue that Bitcoin is the most stable and secure, and why it’s very unlikely that a new coin will take over its crown.
The algorithm that Satoshi Nakamoto implemented for Bitcoin is called SHA-256. So when we talk about the hashrate of the Bitcoin network, or a single Bitcoin mining machine, then we are really talking about how many times the SHA-256 algorithm can be performed. The most common way to define that is how many hashes per second.
You’ll see it listed as H/s or more commonly TH/s, which is one trillion hashes per second!
Hash Rate Units
When Satoshi gave the world Bitcoin back in 2009, it was easy enough to measure hashrate in hashes per second because the computing power on the Bitcoin network was still relatively low. You could mine Bitcoin on your home computer and it was quite possible and likely that you would occasionally earn the then 50 BTC block reward every so often.
Today the block reward is only 6.25 BTC and hashrate is measured in trillions, quadrillions and even quintillions of hashes per second.
Here’s a list of the standard units for hashrate:
How do we estimate the total hashrate of the Bitcoin network?
It is surprisingly tricky to work out the exact hashrate of the Bitcoin network because the mining machines don’t need to identify themselves in order to contribute their computing power to the network. The machines are simply hashing away locally and then communicating to the network (usually via a pool when they have found the latest block.
It’s hard to accurately measure the hashrate of all machines in the network. Hashrate charts are reverse engineered by comparing block frequency and network difficulty. The oscillations exist because difficulty is constant in two weeks but block frequency varies greatly. At F2Pool, we find that estimated Network Hashrate is best represented as a moving average.
The daily estimation of hashrate is calculated by comparing the number of blocks that were actually discovered in the past twenty four hours with the number of blocks (144) that we would expect would be discovered if the speed stayed constant at one block every ten minutes.
The formula looks like this:
It’s a little bit more complicated than just dividing the amount of blocks, because it includes the concept of mining difficulty. Bitcoin is programmed to mine a block about every 10 minutes. It maintains this rate of production by adjusting the “mining difficulty” in line with the overall hashrate of the network. In short, it becomes more difficult for miners to find the target. As hashrate increases, so does Bitcoin’s mining difficulty.
The main point is that the answer that this formula produces is not entirely accurate, and can lead to hashrate charts that look a little strange if they aren’t averaged out. The Tweet below is a good example of the kind of confusion hashrate data can create when it is not presented as a moving average.
Look at this Bitcoin chart. Why is the BTC hash rate oscillating so much? The amplitude seems to have increased in recent months, does that imply hash rate centralization? Or are #Bitcoin PoW pools gaming the difficulty calculation? (to collect more rewards?) pic.twitter.com/pgFmgLXtcZ
— NΦAH (@NoahPierau) March 18, 2020
The chart below shows Bitcoin Hashrate as a three day moving average vs the price of Bitcoin itself, without the wild oscillations.
How does Hashrate relate to mining revenue?
To put it bluntly, the more hashrate you have, the more you’re going to earn from Bitcoin mining. That’s because you are increasing your chances of getting rewarded for discovering a block with every TH/s you add in terms of computing power.
In 2020, modern machines produce between 60 and 100 TH/s. The Whatsminer M20S produces 68 TH/s. Compared to the entire Bitcoin network that one machine is a drop in the ocean. There are millions of machines, in multiple countries hashing away trying to discover the next block.
This means that over time, as can be seen in the following chart, the revenue for 1 TH/s has fallen dramatically.
In June 2020, 1 TH/s will earn less than 10 cents in USD per day. So one M20S will earn around $6, and that’s before you have paid your electricity bill. Mining is a margins game, where every cent counts.
If you’ve been paying attention you might be asking yourself one more question. If one M20S runs at 68 TH/s, and the entire Bitcoin network is above 100 EH/s what on earth are the chances of one individual machine mining a block.
The chances are astronomically low…
If you ran an M20S on its own then probabilistically you would earn a single block every 16 years. It would be a pretty good pay day (around $60,000 at today’s prices) from a machine that costs about $1000, but it’s a long time to wait, and that’s where mining pools come in.
How mining pools take the luck out of mining, and reward you for your hashrate
As the hashrate on the Bitcoin network increases, the chances of earning a reward through solo mining decreases. To increase their chances of earning mining revenue, miners connect to a mining pool to pool their computing power and proportionately share the block rewards of any block mined by the pool based on the amount of hashrate they contributed.
A PPS+ pool, like F2Pool, takes the variance risk away from miners, as the pool will pay out mining revenue to miners regardless of whether the pool successfully mines a block. Usually, PPS+ pools pay out once per day.
If the Bitcoin Network Hashrate is at 100 EH/s (100,000,000 TH/s), a WhatsMiner M20S ASIC miner with 68 TH/s, earns around 0.001224 BTC per day. It’s guaranteed by the pool regardless of luck.
Hashrate is what keeps Bitcoin secure
When Satoshi created Bitcoin and gave it to the world, he took the idea of hashrate and used it to ensure that Bitcoin would remain decentralized and secure. Miners compete with each other to earn rewards and the computer power they contribute to the network makes it very hard for a bad actor to mess around with people’s transactions.
To attack Bitcoin you need at least 51% of all the hashrate in the world, now that the miners produce 100 quintillion hashes per second that’s becoming a very expensive and unlikely scenario. In short, the more hashing power used to mine Bitcoins, the harder it is for a single person to get 51% of it.
Mining difficulty or just “difficulty” is a measure or a network-wide setting that indicates how much effort is required by miners to find a proof-of-work.
In Bitcoin, a proof-of-work is just a piece of data – or more precisely a number – which falls below a predetermined difficulty target that is continually and automatically readjusted by the Bitcoin protocol.
For miners competing in the Bitcoin network, finding or generating this number involves repeatedly hashing the header of the block until the hashing algorithm spits out an output that falls below the aforementioned pre-set difficulty target.
But why do miners do that in the first place?
Miners expend computational energy and compete to find the proof-of-work because finding the proof-of-work is the only way to validate blocks, and validating blocks is how miners in the Bitcoin network make their living.
The first miner to validate a block gets to create a unique transaction, called a coinbase transaction, whereby the miner rewards himself with a set amount of newly minted bitcoins.
How Do Miners Find Proof-of-Work?
The process of hashing is, in fact, quite simple but requires an enormous amount of computational energy.
Put simply, hashing is the transformation of a string of characters (the input) into a usually shorter, fixed-length value or key (the output) that represents the original string.
The trick with hashing is that, while running the same input through the same hashing algorithm always gets us the same output, changing only the smallest bit of the input and running it through the same algorithm changes the output completely.
In order to find the proof-of-work, miners must repeatedly change the input (which is consisted of the block header – the part that stays the same – and a random number called a nonce – which is the variable that miners change to get a different output) and run it through the SHA256 cryptographic algorithm until they find a hash that meets the preset difficulty target.
Using sophisticated mining hardware called ASICs (Application-Specific Integrated Circuits), miners can make hundreds of thousands of these calculations per second.
It takes the entire network of miners roughly 10 minutes to find and validate a new block of transactions.
Why Is Difficulty Important?
The moving or self-readjusting difficulty target is a crucial component of Bitcoin security for several reasons, but mainly because it ensures the network’s neutrality by preventing any single miner from taking full control over the protocol.
The ever-changing difficulty target ensures that the Bitcoin protocol runs smoothly and that a new block is validated and added to the Bitcoin blockchain roughly every 10 minutes on average. This 10-minute interval between blocks is better known as block time.
Difficulty matters for more than just protocol security. Maintaining a stable block time has substantial monetary implications. If miners start mining blocks faster, they’ll generate bitcoins faster, which in turn translates into a higher inflation rate.
Maintaining a low, fixed and predictable inflation rate is essential for a scarce digital asset such as Bitcoin.
How Does Bitcoin Difficulty Change?
In order to keep the block time fixed as more miners join and/or leave the network, the Bitcoin protocol must keep pace and continually readjust the mining difficulty accordingly.
The average block time of the Bitcoin network is evaluated every 2106 blocks (roughly every two weeks); if the block time is greater than 10 minutes, then the difficulty will be reduced, and if it’s less than 10 minutes, the difficulty level will be increased.
In other words, if the cumulative hash power of the network rises, the Bitcoin protocol will readjust and make it harder for miners to find the proof-of-work. And, conversely, if the cumulative hash power drops, the difficulty will drop to make it easier for miners to validate blocks and keep the interlude between each new block and the previous one fixed at ~10 minutes.
It’s important to note that not every cryptocurrency in existence is designed with the same block time in mind. Ethereum, for example, aims for an average block time of 20 seconds, while Litecoin aims for a block time of 2.5 minutes.
You may be wondering: “How does the Bitcoin blockchain know if block times have been longer or shorter than ten minutes on average? Wouldn’t this require an oracle to keep track of block times?”
Good question. The way the blockchain “knows” how much time the average block has taken during this difficulty period is by referencing timestamps left by the miners of each block. To some extent, there are protocol rules in place that prevent a miner from lying about the timestamp.
How Does Difficulty Affect Miners?
Difficulty directly impacts miner profitability. Difficulty adjustments make it easier or harder for active miners to find new blocks and earn bitcoins.
Greater difficulty means that miners need more hashing power to secure the same chance of winning a block reward. Since in today’s world nearly all individual miners join mining pools, greater difficulty means that miners will earn fewer bitcoins per unit of hash power contributed to the mining pool or per unit of electricity consumed.
Usually, when the Bitcoin network experiences a drop in mining difficulty, that means that the price of bitcoin was too low and the most inefficient miners couldn’t cover their operating costs and had to stop mining.
If you are interested in mining, make sure to check out our mining profitablity calculator before you get started.
When inefficient miners shut their mining rigs off, the efficient miners that survive get to experience greater profit margins — but only for a short period of time. In free markets with relatively low barriers to entry, high margins tend to attract competition.
In that way, the Bitcoin protocol – through the moving difficulty target – acts as a self-stabilizing ecosystem.
- Higher margins attract more miners.
- More miners results in greater difficulty.
- Greater difficulty means lower margins. Lower margins translate into greater sell pressure for inefficient miners.
- The selling pressure then further lowers the price by increasing the bitcoin supply while the demand (presumably) stays the same.
Another aspect of the mining business that affects profit is taxes. Every miner needs to know the relevant tax laws for Bitcoin mining in his part of the world, which is why it is so important to use a crypto tax software when calculating profits.
Cool, isn’t it?
Is There a Maximum Difficulty?
Yes, but getting to the maximum difficulty is practically impossible.
The maximum difficulty is a ridiculously huge number (about 2^224), which quite literally means that to mine a block with this difficulty would require all the energy in the universe.
Electricity cost is probably the factor that has the most impact on mining profitability.
After all, Bitcoin’s SHA-256 mining algorithm is classified as Proof-of-Work (PoW) because work must be done to validate the network. The ‘work’ is computational power – therefore electricity is required to validate the network.
Always look at a miner’s hashrate/power consumption ratio. Ideally, you want an ASIC that has a high hashrate and low power consumption. Such an ASIC would be efficient and profitable because you’d hopefully validate a block which would be worth more than your electricity costs.
If you don’t successfully validate a block, you’ll end up spending money on electricity without anything to show for your investment. If you want to maximize your profitability, purchase the most efficient ASIC and mine where electricity is cheap.
In the United States, the average electricity cost is around $0.12 cents per kilowatt-hour. In other countries, electricity cost will vary. Asia’s electricity is particularly cheap, which is why China is home to many mining operations.
Paying taxes is the one thing that many people forget about when they are trying to figure out if mining is porfitable or not.
Just like any business, miners must also pay taxes on the profits, which makes margins even tighter for the miner.
Make sure that when you are calculating your mining profitability, you also consider what the tax situation on mining is like in your country and use a crypto tax software to help you out.
Profitability of Bitcoin mining on iPhone and iPad
If destroying your device isn’t enough to change your intentions, maybe the profitability will. Simply put, mining with iPhone and iPad is not profitable in 2022.
The mining on mobile devices was actually never profitable. Remember that you are at a high risk of killing your device before reaching the return on investment.
However, mining on iPhone was much more profitable the year before, when you could make some buck due to the high Bitcoin price. Below is a table I found on another blog, where they calculated the mining earnings of the latest iPhone. Unfortunately, even back then, it would take years to get your investment back:
and now in 2022, it’s safe to say you should divide these numbers by 5 in order to get a correct earnings estimate.
For me, this brings the one and only conclusion. Bitcoin mining on iPhone and iPad is currently not profitable and should be avoided or replaced with an alternative.
Bitcoin Mining Set-Up Examples
Here are the different cases where you can earn great profit. However, please take note that others really spend on their machineries to get these impressive rewards. Check it out below and see for yourself how you can profit from Bitcoin mining.
GTX 1080 Ti
For the six GTX 1080 Ti, each has 11 Gb of RAM. But they consume so much power, about 300 watts each. It could have a total of 1900 watts of total power consumption.
For this setup, it uses 1000 watt EVGA power SuperNova to provide enough power to the video cards. Aside from those, it uses 8 GB of DDR4, Intel Celeron G3900 Skylake Dual-Core 2.8 GHz LGA 1151 and a 120 GB SSD to run everything quickly.
It also uses 6 razors to connect each video card to the PCI Express ports and invest on a new motherboard that can run all of those at the same time. It also got a mining rig case to hold everything.
After setting up the Bitcoin mining rig and installing a Bitcoin mining software, find a good hash and it can immediately earn $42, which is already a lot of money. If this amount is multiplied by 30, the monthly earnings from Bitcoin mining would be $1,260. If this continues, the annual profit from Bitcoin mining would be $15,120.
Check Price at Amazon
Antminer S9 Bitcoin Miner
Here’s another example using Antminer S9 Bitcoin miner. This miner does 14 Terra hashes a second and uses 1350 watts.
If you plug 14 Terra hashes on the mining profit calculator and considering the power consumption, you will probably use $3.90 power every day if you are paying $0.12 kilowatt per hour. In a year, you will pay around $1,423 for power consumption just to run Antminer S9.
According to JMS, you will earn $8,602 of pure profit in a year with this Bitcoin miner. The Bitcoin difficulty continues to rise, so in time you will get less and less of Bitcoin.
But the one thing that can balance the difficulty and how much Bitcoin you mined is – if the price of the Bitcoin continues to increase.
Check Price at Amazon
7. Conclusion: Which is the best Bitcoin miner?
The Whatsminer M30s++ and the Antminer S19 Pro emerge as the best options to allow you to make profits over your mining operation – assuming your electrical bill is cheap enough.
If Bitcoin rises in price again and mining becomes more profitable, more and more companies will start to manufacture Bitcoin mining hardware.Samsungis just one example for this.
In turn, this would increase the supply and lower miner prices even more.
Have you tried mining with any of these miners? Want to share your experience? Let me know your thoughts in the comments section below.
Calculating Potential Profits From Crypto Mining
For a while now, Ethereum has reigned supreme in terms of profitability—far outshining any other mine-able cryptocurrency on the market. In the past, however, other cryptocurrencies proved equally profitable to mine. Most notably, in 2017, tokens such as ZCash were a viable option.
Nevertheless, in 2021, there’s little doubt that Ethereum is the most profitable cryptocurrency to mine on a consumer-grade computer. A handful of other cryptocurrencies, including Bitcoin and Litecoin, can only be mined on specialized hardware called ASICs—which are hard to come by compared to computer hardware.
Related: What Is ASIC Mining?
If you own one of the latest generation graphics cards, such as Nvidia’s RTX 3060 Ti or 3080, there’s significant money to be made.