Bitcoin mining has pushed the cost of some of the critical hardware components, like graphics cards, through the roof. This has made it all the more important to carefully calculate whether your rig will be turning profit any time soon, especially for new miners. Lack of experience and planning can put a stop to your mining operation before it even starts.
The first thing to consider is the market value of Bitcoin. Unfortunately, this is a pretty volatile component and daily swings can easily push you out of your profit zone. Back in 2011, Bitcoin value was $2, but you could easily mine 100 BTC using nothing else but your computer’s CPU. These days are long gone and buying a decent rig is a serious investment, due to increased competition.
The mining difficulty is always adjusted to reflect the overall performance of the network. Each new batch of 2,016 blocks will have its difficulty manipulated up or down, depending on how the previous batch of 2,016 blocks was difficult to mine. Ideally, this means that the difficulty is adjusted every two weeks.
This has been a constant source of argument in the mining community and has produced several endless debates.
The second most important factor is the electricity cost. Mining requires extensive use of your CPUs and GPUs, which in turn forces your rigs to burn huge amounts of electricity. If you haven’t been careful with your calculations, you could easily find yourself in a situation where your earnings can’t cover the costs of running your rigs.
One of the solutions is using the renewable sources of power, like solar panels, but these require higher initial investment in the system. In the long run, however, they are extremely beneficial and can make or break your operation.
Another detail that uses the electric power is ventilation. Mining rigs will give off huge amounts of heat and if not properly ventilated can pose a fire hazard. Nothing ruins your day like watching your computers worth thousands of dollars going up in smoke. Literally.
Bitcoin Mining Hardware Costs
This is the most important segment of any bitcoin mining equation. ASIC (Application Specific Integrated Chip) mining rigs will give you the best bang for your buck, but the entry models cost in excess of $1,000. Top of the line rigs can easily reach a price of $5,000.
GPU (Graphic Processing Unit) rigs are less expensive but far less effective as well. It is possible to mine with them and make a profit, but you would have to join a mining pool. These pools combine the mining power of their users and allow them to compete with mega-sized operations. Your end of the block rewards will reflect your contribution.
GPUs are hard to obtain at a decent price at the moment, due to a high demand for bitcoin miners. The manufacturers simply can’t keep up, and this has made miners very unpopular in the gaming community, another group that craves ultra-fast GPUs.
Unlike ASIC rigs, which can only mine bitcoin, GPU rigs can be programmed to mine just about any coin on the market, allowing you more flexibility. When dealing with such volatile market as the cryptocurrency, this can be a lifesaver.
Designed to motivate the miners, the mining fees will be their chief source of revenue, once the total number of bitcoin (21 million) is mined.
The node that successfully finishes the Proof-of-Work algorithm first is awarded a block reward. At the moment, the reward is 12.5 block, with every 210,000 blocks halving it.
Since 2016, transaction fees have been playing a significant role in any calculation of profitability. In earlier years, they weren’t much of a factor, but due to a huge increase in network size, they have to be considered, as they can put a serious dent in your profit margin.
Bitcoin Mining Hardware – Is it Worth It?
As with most complicated questions, the answer is:” It depends.” If you have the funds to make a serious investment into your equipment and if you have access to cheap electricity, then yes, it is absolutely worth it. At least until the next time market takes a dive on you.