Most Bitcoin mining hardware appears profitable at first glance. Bitcoin mining, unfortunately, isn’t simple and there are a number of hidden costs and constantly changing factors. This guide will help you understand Bitcoin mining profitability and give you a good estimate of your expenses and earnings.
Bitcoin Mining Profitability Factors
The most obvious expense in Bitcoin mining is mining hardware. Better, newer miners will cost more, so if you’re serious about investing in Bitcoin mining then aim for efficiency (more below). In addition to a Bitcoin miner, you may need extra cables, power supplies, software, and cooling fans.
A bitcoin miner’s job is to convert electricity into hash power. Miners that do this using the least amount of electricity per hash are the most efficient. The Antminer S9, Antminer S7, for example, converts electricity to hash power at 0.25 W/Gh. The SP20 Jackson, a popular miner by Spondoolies Tech, converts at 0.65 w/Gh.
Electricity costs vary by location, but this means that an Antminer S7 run in the same place as an SP20 converts electricity nearly three times more efficiently. It’s important to compare both hardware prices and efficiency when purchasing a miner.
Miners with low electricity costs have an advantage, as monthly costs are much lower. Venezuela’s government has implemented price controls, which has created some of the lowest electricity prices in the world. According to an article from Bitcoin Magazine, a 320 kw electric bill cost just 6 cents. About 1,000 people mine Bitcoin full time in Venezuela.
The situation in Venezuela is an extreme example, but shows how cheap electricity effects mining profitability.