Bitcoin Mining Profitability

How to understand Bitcoin Mining profitability

Everyone who deal with bitcoin mining for the first time is interested in profitability. In the end, we are doing this because of a profit, right?

A new user contact us with the quite same question every time: "how much does this miner or its share part mines daily?" Then we have the same all scenario: the user sees a response from us with an amount of like 30 cents per day, then do a simple math "okay, let's multiply this by 365 days a year to see what i'm gonna get per annum" and here we have – only $109.50 per annum for ~$100 investment.

A little disappointment. "I thought there will be for at least $1 daily, i used to hear that mining is very profitable. Why it's so small?" – this is the first thing comes to mind to a new investor. Enough, that's a totally wrong mindset to get the point. And now BeMine wanna bring some clarity: what determines mining profitability and what makes bitcoin mining profitable despite of the market and numbers from a calculator.

Profitability factors

Bitcoin/United States Dollar exchange rate

Mining rewards are in bitcoin, not dollars. So the BTC/USD price determines how many dollars any miner will get daily. However, bitcoin price is very volatile. Its exchange rate rides a roller coaster every week at the charts. We don't even know its price for the future, so how can we calculate long-term returns in dollars if bitcoin price changes every hour? The answer is: forget any dollars for the near future and focus on the situation you come in mining and what are a costs at the moment.

It’s always better to buy when the price is low, because mining equipment price correlated with BTC rate. Due to the fact, that bitcoin is increasing in a long term as it used to, there should be more dollars than invested anyway, even when it seems like it’s not with all these red candlesticks in the short term. Is $16,000 for Bitcoin a disaster? 3 years ago it was $3,000 and also felt like a disaster.
The network difficulty

This is a second mining profitability factor. As we already know, the emission of bitcoin takes place through mining. There is no other way to produce it. But when supply exceeds demand, the price drops – that’s the economy basics. To avoid uncontrolled printing of new bitcoins and prevent the price from falling, the bitcoin network has a built-in difficulty parameter. The difficulty makes it harder to find the block of each miner in such a way that each ASIC miner or GPU has less chance of earning a reward of brand new bitcoins. Only 6.25 new bitcoins should be created every 10 minutes in the whole world.

The more quantity and more powerful devices are decrypting blocks, the more difficult it is for each individual miner to get bitcoin. As soon as the price of bitcoin falls too low, it becomes unprofitable to mine in most places across the Earth, because they begin to consume more electrical energy than they produce profits in dollars. Then many people are forced to disconnect their equipment and the difficulty of the entire bitcoin network drops. Those who remain in mining start earning more funds – they get a bigger piece of the pie. This is called the surrender of the miners. We at BeMine always have some of the lowest power consumption fees on the market because our hotels are energy optimized so we are ready to survive instead of surrender.
Power consumption

That’s easy: ASIC equipment is just a metal box with chips and cooler fans. All it does is mine bitcoin, performing endless and very difficult computer calculations by the only one algorithm. This work requires a huge amount of power, so miner consumes energy no less than vacuum cleaner. They also sound the same, by the way.

That’s why a right place is important, because different countries have a different electricity taxes. In every country, electricity costs its money. Traditionally, in Europe, the US and most places on Earth, electricity is too expensive for mining to be profitable. United States miners remain the first, because they constantly get out with cooling and efficient consumption of more expensive electricity. However, mining in USA is a closed market not for everyone. This is a niche that has long been divided among major players. BeMine is open for everyone and we have mining hotels in Russia, so the service has a way less energy fees than the most of the cloud mining market.
Pool fees

In order to mine efficiently, miners combine their mining hash power into pools. Then all machines find blocks with a higher probability and receive more income from the total computing power than if you simply connect your miner directly to the network. For this pools take their percentage of bitcoin income. Usually it's 1-2% – for miners it's worth it, but the pools get huge funds from it. However, in meticulous calculations of profitability, they should also be taken into account. BeMine also uses the services of the largest pools, connecting equipment to them. This way we can achieve the best return for our users.


How can we win knowing all the process? That's easy – bitcoin mining is profitable anytime for anyone, but usually in a long run. The market is all-green? Great! Time to join and earn some money from a short-term trend to return until it falls. The market is red? Cool! While middlebrows are once again burying bitcoin, now mining equipment is way cheaper and the ROI comes faster when the situation becomes green again as usual. Remember for a long term? That’s how it works.

There is always a balance in the mining market: no one will do what isn’t beneficial to do. Mining has long turned into an industry where the profit doesn’t exceed the investment many times over in one month, but brings a very good profit in any case. Although it is impossible to predict it exactly, we see trends: miners win for many years due to market equilibrium.

Mining with a suitable equipment makes a volatile, but constant profit, especially when a power consumption fees are inexpensive. Bitcoin used to grow through the last 14 years, sets all trends for the rest of the crypto and no one will ever can take away its status of the first cryptocurrency. So it’s better to have something that produces it around the clock.
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