Today Bitcoin mining (although, it is not possible with traditional mining hardware now) is the main source of income for internet savvy folks. If I would say we are breathing in Cryptocurrency era, it will not be wrong. With every passing day, digital currencies beating legal tenders and spreading their legs in the market.
I really don’t know and hence unable to tell you, what magic is working behind the huge popularity of Cryptos, but its happening and we all are the witnesses of this change. Cryptocurrencies are becoming more and more convenient way of buying goods & services and investing money.
- Coinbase: The Giant of Cryptocurrency Market [Review]
- 10 Bitcoin Mining Calculator Websites For Cryptocurrency Mining
And with every passing day, there are new doors of income possibilities are opening related to digital currencies. But as old is gold, there are two sources of income from Cryptos are the best and most popular ways.
Here I have used “Bitcoin” not only for its popularity but its reliability too. Though, there are many other Bitcoin alternatives available in the market. If you don’t wanna choose Bitcoin for Mining you can also consider for other popular currencies like Litecoin, Ethereum etc.
Now the question is, is the Bitcoin mining worth for profitability today?
Well, it depends.
All this matter depends on what hardware you are using and how much energy the hardware consumes.
So, today’s topic is on Energy consumption Vs Profitability and digging in more depth, I have found a two “formulas” to get maximum profit from Bitcoin mining or any other Cryptocurrency mining. The formulas are,
- H1 + E + P << H2 = Profit
- H1 + E + P >> H2 = Loss
We will go in-depth on these formulas as you read this article till the last.
So, let’s begin.
What is Bitcoin mining
Bitcoin Mining or Cryptocurrency mining is a process by which we can find new Cryptocurrency coins. It’s all possible by Blockchain technology. In 2008, Satoshi Nakamoto, the founder of Bitcoin, created a decentralized server algorithm which is called Blockchain.
You can read my article on Blockchain technology for more information on Blockchain
Blockchain is a decentralized server algorithm which is able to distribute and store the same data equally on all over the computers and servers connected to the network. This is the key process of Cryptocurrency mining.
In Bitcoin and Cryptocurrency mining we have been provided with a block and to solve it digitally to mine new Bitcoins. The solving process requires computational power of the connected hardware which is calculated in “Hashrate”. When the block is solved the miner is rewarded with few Crypto coins.
Though we can solve a block with our own hardware, this process takes a lot of time depends on your currency. For example, if you choose a Bitcoin block to solve, it takes eras to solve the block with your limited hardware resources.
Then what is the solution? you should join mining pool of Crypto miners where every miner is rewarded with some percentage of Cryptocurrencies equivalent to the hash rate you have provided to the pool.
Cryptocurrencies are just like gold, as much you mine as less the quantity of gold in the womb of planet earth. And with less quantity, the mining difficulty also increases. This is the reason why Bitcoin is compared with gold. Today the mining difficulty of Bitcoin is very very much hence the price is skyrocketing.
How a Cryptocurrency Block is solved
A Block is a box of verified transactions which miners wanted to publish on the public blockchain. When a mining pool or an individual miner takes a block to solve they generally solve a mathematical puzzle and after solving the puzzle they are rewarded by Cryptocurrencies which they can use in various purposes like trading, exchanging and buying good and services.
The mathematical puzzle requires hash power to solve and this hash power comes from your computational hardware. There is no quick way to solve this mathematical puzzle and the hardware has to try all the possible conditions to solve the puzzle. So the solving of Block requires more time.
The other aspect of the Block is when we solve the block and rewarded by Cryptos, the same amount of Cryptos decreases from the Public Blockchain. Hence the next mining possibility becomes harder and harder. This concept came from the traditional mining where as much we mine, the amount of the particular mineral decreases on earth and the mining becomes more and more costly and harder.
The price of respected mineral, or in our case, Cryptocurrencies directly proportional to the mining difficulty.
Today the price of Bitcoin is skyrocketing. Why? The answer is simple. This is the first Cryptocurrency introduced on the market. Hence, mined hugely in past 10 years. And then, because of the shortage of Bitcoin, mining has become harder and time-consuming today.
Computational Power or Hashrate Plays a big role in Mining
How much you can earn from Bitcoin mining depends on the hash power you contribute to the mining pool. before 2012 Bitcoin can also be mined by a simple gaming computer. But all things change with time and the difficulty of Bitcoin puzzle also became harder. Now the point is, you can’t mine Bitcoins with just a gaming computer.
Today solving a block take much longer time than earlier days. Now no gaming cards or something else with low hash rate can mine you the income for living. So, there is hardware called ASIC miner designed for especially Bitcoin mining, selling hawkly on Amazon.
But, keep in mind even if you buy a decent ASIC miner and start to mine, your energy consumption cost would be more than your mining rewards and the result will not be in your favour. You can’t imagine how difficult is to mine Bitcoins today. So whats the catch?
Join mining pool with a decent ASIC miner and you can earn nice cash with no time. Afterall Computational power or hHashrate Plays a big role in Bitcoin mining. More hashrate means more money.
A mining pool is a community of ASIC miners where you contribute your hash power to solve a block and in return, you receive a percentage of Bitcoin reward. The amount of reward depends on the hashpower you provide to the pool.
There is 1 more benefit to joining a mining pool. If you don’t want to wait for years to solve a Block individually, you must join a mining pool. Mining pools have the hash power which can solve a Block within few days or few hours. So, always go with mining pool to get genuine income.
Don’t forget that in Cryptocurrency mining, Hash power plays the most important role.
More hashpower means more money.
Energy Vs Hashrate
Any computer or hardware consumes energy in form of electricity. A simple home PC consumes approximately 120W/h and provides hashrate nearly 30MHs. Now see, if we use an ASIC miner like Antminer D3 instead of a simple computer then it’s energy consumption is nearly 1600W/h and it provides hashrate of 19,300.0 MH/s.
If we compare power consumption and hashrate of a simple PC with Antminer D3 we can clearly see the Ant miner is much powerful than simple PC with respect to the power consumption.
The formula of Mining Profitability
Now come to the main point of this article.
How we calculate the profitability of a Bitcoin miner to know if it’s profitable to buy an ASIC miner or not? Especially, for this reason, I have derived a couple of formulas which are very simple and provide you with the profit and loss data before investing a dime into buying an ASIC miner or some other hardware. These formulas are equally useful for all the Cryptocurrencies. You can use these formulas to calculate the profit and loss of any digital currency mining.
The formulas are,
H1 + E + P << H2 = Profit
H1 + E + P >> H2 = Loss
Where, H1 = Hardware Cost, E = Energy Consumption cost, P = Pool Fee, H2 = Hashrate
If the hashrate (H2) delivered is higher than the total cost (H1 + E +P) than we get profit but when the hashrate (H2) delivered is samller than the total cost (H1 + E +P) than we will face loss.
You can simply use this formula to calculate the profit and loss of your mining rig.
Though, the main formula to calculate the exact profit/loss is,
N* B* H* 86400/D * 232
H = Hashrate (hashes / second)
D = Difficulty (Reference for values below)
B = Reward per Block (Reference for value below)
N = Number of days per month (default = 30)
S = Number of seconds per day (S = 60 * 60 * 24 = 86400)
To see above formula in action follow the link
I have just simplified this formula.
As you can see how simple is to calculate the profit/loss without buying any mining rig or hardware, I think you can use these formulas to start your career in Bitcoin mining. Along with Bitcoin mining, other cryptocurrency mining is also a good career option for you. Now it’s your turn to choose this job as a career or not.
If you are going to start Bitcoin mining then comment below how this article helped you? Also, share this article with your friends to help them out with Bitcoin mining.
You might also like