Will 2017 be Profitable for Bitcoin Mining? Bitcoin mining during its early days most profitable bitcoin mining rig hardware generally called as a gold rush. People with a strong interest in such things were first to stake their claim, namely cypherpunks, cryptographers, technically-minded libertarians and assorted hackers.
But is there still gold in them thar hills? From a few of early enthusiasts, it is with certainty that Bitcoin mining has advanced into a cottage industry to a specialized industrial-level venture. The easy money was taken out long ago and the rest are hidden under the cryptographic equivalent of miles of hard rock. To be able to profitably excavate bitcoins nowadays, you need to have specialized, high-powered machinery.
While it is technically possible for anyone to mine, those with underpowered setups will spend more money on electricity than have money generated through mining. A new block is created on average every ten minutes. Proof of Work Hashing: this is the function miners perform in order to define a new block. PoW hashing ensures the proper function of the Bitcoin blockchain.
There are no shortcuts in this process, which can only be solved with raw computational power. By correctly hashing the current block, miners prove their investment of work and are rewarded with a certain number of newly-created bitcoins. Block Reward: the number of newly-created bitcoins. This number was initially set to 50, halved to 25 in late-2012 and will halve again to 12. Hashrate: a measure of a miner’s computational power. Difficulty: with hashrate shooting up over the years, it would seem blocks would be found by miners ever more rapidly.
Bitcoin’s Difficulty measure is what prevents this from happening, ensuring blocks are found roughly every 10 minutes. When total hashrate rises, the Difficulty of POW hashing adjusts upwards – and the inverse also applies. Electricity is the major on-going cost of Bitcoin mining. The price paid per Watt will greatly influence profitability. By banding together with other miners in a so-called pool, your combined odds of solving a block rise proportional to the pool’s total hashrate. Calculating Mining Profitability Having these terms in mind, it’s viable to calculate the current profitability of Bitcoin mining for your circumstances.
Bear in mind that the future profitability of mining cannot be reliably predicted. This is because of the ever-changing nature of the Difficulty modifier and the BTC price, in particular. To start, we must select a suitable ASIC mining rig. 150 or so is added for the power supply units. Next, we need to enter the S7’s specs and cost, as well as other info such as power cost and pool fees, into a suitable number-cruncher. BTC price, Difficulty and block reward info.
Check worldwide electricity prices or your utility bills for the exact price to know your own power cost. There is generally lower or no fees for smaller pools but remember that they will seldom find blocks. Various pools’ fees and reward structures are compared in this list. 800 per year and you can use the miner’s excess heat to warm your home. But, this could be an unsafe assumption! Bitcoin’s average hashrate surprisingly climbed by a whopping 30 percent by the time this article is being written. 500 is lost over one year’s worth of mining.
The aforementioned scene works as a perfect picture of the risks present in the Bitcoin mining. There is a possibility that even some big, corporate miners will be injured from such a steep Difficulty spike. Unless home miner has access to free or very low-cost electricity, it really has zero chance to compete in such challenging environment. Remember also that the rate of degeneration in Bitcoin hardware is tremendously fast! There are many of other inaccurate things, and such downside risks must always be considered into any concept business plan. The Chinese Scenarios For interest’s sake, let’s check the scenario of Chinese miners, who represent the majority of Bitcoin mining power for good reason. The results may help us better predict the post-halving Bitcoin environment, as this article attempts to do.
Hobby Miners Some Chinese regions are over-supplied with electricity, which are subsidized in many instances. Because of this, low power cost is made and we’ll assume to be 7c for a miner in the right province. That’s twice the profit of their American counterpart! For a Bitcoin lover, this is an easily-acceptable loss.