There are many factors and variables that need to be considered to conclude and answer if bitcoin mining is profitable. The short version of answer would be " its depends on how much can you or willing to invest for mining". Well there is a way to calculate mining profitability when considering different factors which is "Bitcoin Mining profitability calculator".
The Sad Truth About Bitcoin Mining is:
Only those who possess or can afford high powered machinery can mine bitcoins with profitability . While mining is still technically possible for anyone, those with under powered setups will have more money spent on electricity than making money on bitcoins. In simple words you will have losses.Mining won’t be profitable at a small scale unless you have access to free or really cheap electricity.
I will explain everything in depth so its best we start from knowing a few basic technical terms from the world of Bitcoin mining:
BITCOIN MINING TERMS YOU SHOULD KNOW
Hash Rate:
Hashrate is the measure of a miner’s computational power. In simple words Hash is the mathematical problem that needs to be solved which is done by computational power. GPU's tends to do it faster than cpu and more efficently that is why you see GPU mining rig not CPU mining rig.Hashrate(solutions) is the rate at which these problems are being solved.
The higher their relative power, the more solutions (and hence, block rewards) a miner is likely to find.
Initially measured in hash per second (H/s), due to the increasing speed of mining hardware. H/s was soon commonly pre-fixed with SI units as follows:
Kilohash = KH/s (thousands of H/s), then
Megahash= MH/s (millions of H/s), then
Gigahash = GH/s (billions of H/s), then
Terahash = TH/s (trillions of H/s), and even
Petahash = PH/s (quadrillions of H/s).
Block:
A Group of Bitcoin transactions, which are the list of all currently pending transactions and recorded by a miner into the ever-growing record of blocks known as “the blockchain.”Bitcoin coins have a block time of 10 minutes, In simple words a new block is created on average every ten minutes.
Block Reward:
Each time a block is solved, a constant amount of Bitcoins are created and rewarded to miners.This number was initially set to 50, halved to 25 in late-2012, and halved again to 12.5 in july 2016. The next halving event expected is around mid-2020.
This halving process will continue in this fashion, bitcoins will be halved until all 21 million bitcoins are created.
Bitcoin Difficulty:
Since Bitcoin gained a lot of attention and so many people came into mining,Bitcoin Network's Hash Rate increased exponentially, Bitcoin block time was reduced from 10 minutes. So difficulty of solving the mathematical problem has to increase in order to adjust the block time and network's Hash Rate increase that is the reason why there are fluctuations in difficulty. Basically the more miners that join, the harder it gets to actually mine bitcoins.Electricity Rate:
Using bitcoin (which can be ASIC or any electronic device) requires electricity. Electricity is the major on-going cost of Bitcoin mining. Electricity rate can be found on your monthly electricity bill.Power Consumption:
Each miner Consumes a different amount of energy. You will need to know your miner's exact power consumption before calculating profitability.. The price paid per Watt will greatly influence profitability. You can find this on interenet through some research.Pool Fees:
A mining pool is a group of miners that mine bitcoin faster and more efficiently. Mining in solo is not as profitable as mining in pool that is because mining in pool bitcoins are mined faster and you will receive your bitcoins per share depending on how much computation power you provide although there are different pools out there for different shares. Joining a mining pool has fees which is usually around 1.5% and different pools have different mining fees.Profitability decline per year:
This is probably the most important variable of all. There is no way of telling how many miners will joins the network for bitcoin mining so no one can -predict that how difficult it will be to mine in 30 days ,6 months or even 6 years. this is a major reason why no one can tell for how long will bitcoin mining be profitable.The future profitability of mining cannot be reliably predicted.
This is due to the ever-changing nature of the Difficulty modifier and the BTC price, in particular.
To begin, we must select a suitable ASIC mining rig. To aid in selection, the Bitcoin Wiki provides a handy mining Hardware Comparison
As of today the most advance miner out there is Antminer S9. It's what is known as an ASIC mining rig. It is designed only for mining and provides Hash Rate of 14TH/s. If we use the simple Bitcoin miner calculator
But of course this doesn't take into account the hardware cost,electricity cost, pool fees, etc. Let's try to calculate.
An excellent result! At this rate, the S9 unit would pay for itself within a year as well as make Profit as well ! As a large miner would be able to negotiate a lower unit price on each S9, we can assume they’ll research profit even sooner.
However:
There is a catch ,this is on dangerous assumption! Bitcoin’s total hash rate – and thus its difficulty, has been consistently rising and will continue to do so since the early years, sometimes by jumping double digit percentages within a month!
Apart from that there are plenty of other things which needs to be considered is they could go wrong, for example:
- Hardware failures,
- Power outages,
- Network disconnections &
- Price crashes.
So is Bitcoin Mining Profitable?
Yes, It is but only if you invest huge amount of capital in a good mining rig otherwise not. f you do not have the time or the money it would be best to stay away from mining and just invest in buying Bitcoins for the long run.
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