Bitcoin mining has long been a hot topic in the crypto industry. As a primary method of acquiring Bitcoin, mining consistently garners attention. Companies like Marathon, Riot, and CleanSpark have not only relied on mining to achieve public listings but have also attracted investments from major financial institutions such as BlackRock and Vanguard. Clearly, mining has become a critical component of Bitcoin investment.
However, as market competition intensifies, many have started to question the profitability of Bitcoin mining. This article will delve into the key factors that impact Bitcoin mining profitability, helping readers to understand the current prospects of mining profitability better.
Calculation Method for Bitcoin Mining Profitability
Calculating the profitability of Bitcoin mining involves two main components: revenue and costs.
Revenue Calculation:
The total revenue from Bitcoin mining depends on the expected number of Bitcoins mined within a certain period and the market price of Bitcoin. The formula is:
Total Revenue = Number of Bitcoins Mined × Bitcoin Price
The number of Bitcoins mined is determined by the miner’s hashrate, the proportion of the total network hashrate, and the block reward. The formula is:
Number of Bitcoins Mined=(Total Network Hashrate / Miner’s Hash Hashrate) × Block Reward × Number of Blocks in the period
While mining difficulty should ideally be calculated based on the total network mining difficulty, when the network hashrate is stable, using the total network hashrate can simplify the calculation without significant deviation from theoretical values.
Cost Calculation:
The main costs are electricity and miner power. The formula is:
Cost = Miner Power × Electricity Fee × Time
Example Calculation:
Following the fourth halving, the block reward is 3.125 BTC, with 144 blocks produced daily (one block approximately every 10 minutes). Thus, the daily net profit from mining can be calculated as:
Net Profit=Bitcoin Price × (Total Network Hashrate / Miner’s Hashrate) × 450 − Miner Power × Electricity Fee × 24
When is Bitcoin Mining Profitable?
Based on our previous discussion, the key factors influencing profitability are Bitcoin price, miner hashrate, total network hashrate, power consumption, and electricity price. Bitcoin price and total network hashrate fluctuate with the market, while there’s a correlation between miner hashrate and power consumption: more mining machines mean greater hashrate but also higher power consumption. Advanced mining chips offer lower unit power, making them more energy-efficient. Additionally, electricity costs vary depending on the miner’s geographic location.
Using 2024 data as an example, the total network hashrate is about 600 EH/s, with Bitcoin prices ranging from $50,000 to $70,000. Mainstream mining machines have unit power between 42W/T and 12W/T, and electricity costs vary by region, from $0.01 per kilowatt-hour (in areas like the Middle East and Africa) to $0.075 (in some U.S. states).
Assuming each miner’s hashrate is 1 PH/s and Bitcoin’s price is $50,000, here are the net profits under different conditions:
High-power consumption machines (42W/T) with high electricity fee ($0.075/kWh):
- Daily net profit: $50,000 × (1/600,000) × 450–42 × $0.075 × 24 ≈ -$38.1
- Result: Loss
Medium-power consumption machines (29W/T) with high electricity fee ($0.075/kWh):
- Daily net profit: $50,000 × (1/600,000) × 450–29 × $0.075 × 24 ≈ -$14.7
- Result: Loss
Medium-power consumption machines (29W/T) with moderate electricity fee ($0.04/kWh):
- Daily net profit: $50,000 × (1/600,000) × 450–29 × $0.04 × 24 ≈ $9.66
- Result: Small profit
Based on the above analysis, we can conclude:
When Bitcoin prices are low ($50,000), and miner unit power is high (42W/T), profitability is possible only in regions with meagre electricity costs ($0.01/kWh-$0.037/kWh). For instance, in the lowest electricity cost scenario, even older mining machines can yield a daily net profit of approximately $27.42:
Net Profit = $50,000 × (1/600,000) × 450 − 42 × $0.01 × 24 ≈ $27.42
For moderate electricity costs ($0.037/kWh-$0.05/kWh), using mining machines with unit power below 31W/T is recommended. This ensures profitability even if electricity costs reach $0.05/kWh:
Net Profit = $50,000 × (1/600,000) × 450 − 29 × $0.04 × 24 ≈ $9.66
In high electricity cost regions ($0.05/kWh-$0.075/kWh), opt for new mining machines with power consumption below 20W/T, such as the Antminer S21 Pro or WhatsMiner M63. However, carefully consider the high purchase costs of these machines.
If Bitcoin prices rise to $70,000, even with moderate electricity costs ($0.04/kWh) and moderate unit power (29W/T), daily net profit can reach approximately $24.66:
Net Profit = $70,000 × (1/600,000) × 450 − 29 × $0.04 × 24≈$24.66
At a $70,000 Bitcoin price, in regions with meagre electricity costs ($0.01/kWh), even using high-power consumption machines (42W/T) yields a daily net profit of about $42.42. Using medium power consumption machines (22W/T), the daily net profit can reach $47.22.
Therefore, Bitcoin mining remains profitable in most scenarios. In regions with meagre electricity costs, older mining machines can still be profitable, reducing purchase costs, though with higher maintenance costs. In areas with high electricity costs, selecting new machines with low power consumption or selling when Bitcoin prices are higher is essential to ensure profitability.
