Bitcoins

1. “Is Bitcoin Mining Profitable in 2017?“
The short answer would be “It depends on how much you’re willing to spend”. Each person asking
himself this will get a slightly different answer since Bitcoin Mining profitability depends on many
different factors. In order to find out Bitcoin mining profitability for different factors “mining profitability
calculators” were invented.
These calculators take into account the different parameters such as electricity cost, the cost of your
hardware and other variables and give you an estimate of your projected profit. Before I give you a
short example of how this is calculated let’s make sure you are familiar with the different variables:
Hash Rate – A Hash is the mathematical problem the miner’s computer needs to solve. The Hash Rate
is the rate at which these problems are being solved. The more miners that join the Bitcoin network,
the higher the network Hash Rate is.
The Hash Rate can also refer to your miner’s performance. Today Bitcoin miners (those super
powerful computers talked about in the video) come with different Hash Rates. Miners’ performance is
measured in MH/s (Mega hash per second), GH/s (Giga hash zper second), TH/s (Terra hash per
second) and even PH/s (Peta hash per second).
Bitcoins per Block – Each time a mathematical problem is solved, a constant amount of Bitcoins are
created. The number of Bitcoins generated per block starts at 50 and is halved every 210,000 blocks
(about four years). The current number of Bitcoins awarded per block is 25. However soon enough
the block halving will occur and the reward will be downgraded to only 12.5 Bitcoins.
Bitcoin Difficulty – Since the Bitcoin network is designed to produce a constant amount of Bitcoins
every 10 minutes, the difficulty of solving the mathematical problems has to increase in order to adjust
to the network’s Hash Rate increase. Basically this means that the more miners that join, the harder it
gets to actually mine Bitcoins.
Electricity Rate – Operating a Bitcoin miner consumes a lot of electricity. You’ll need to find out your
electricity rate in order to calculate profitability. This can usually be found on your monthly electricity
bill.
Power consumption – Each miner consumes a different amount of energy. Make sure to find out the
exact power consumption of your miner before calculating profitability. This can be found easily with a
quick search on the Internet or through this list. Power consumption is measured is Watts.
Pool fees – In order to mine you’ll need to join a mining pool. A mining pool is a group of miners that
join together in order to mine more effectively. The platform that brings them together is called a
mining pool and it deducts some sort of a fee in order to maintain its operations. Once the pool
manages to mine Bitcoins the profits are divided between the pool members depending on how much
work each miner has done (i.e. their miner’s hash rate).
Time Frame – When calculating if Bitcoin mining is profitable you’ll have to define a time frame to
relate to. Since the more time you mine, the more Bitcoins you’ll earn.
Profitability decline per year – This is probably the most important and illusive variable of them all.
The idea is that since no one can actually predict the rate of miners joining the network no one can
also predict how difficult it will be to mine in 6 weeks, 6 months or 6 years from now. This is one of the
two reasons no one will ever be able to answer you once and for all “is Bitcoin mining profitable ?”.
The second reason is the conversion rate. In the case below, you can inset an annual profitability
decline factor that will help you estimate the growing difficulty.
Conversion rate – Since no one knows what the BTC/USD exchange rate will be in the future it’s hard
to predict if Bitcoin mining will be profitable. If you’re into mining in order to accumulate Bitcoins only
then this doesn’t need to bother you. But if you are planning to convert these Bitcoins in the future to
any other currency this factor will have a major impact of course.

2. Get a mining calculator
In order to calculate all of these parameter and get an answer to our question we will use a mining
profitability calculator. here’s a simple mining calculator from 99Bitcoins:
Difficulty factor
Hash rate
TH/s
BTC/Block reward
USD/BTC exchange rate
Pool Fees %
Power (Watts)
Power Cost (USD/kWh)
Hardware Costs (USD)
Calculate mining profit
However, now let’s take a look at a more complex example were we include more factors:
Today one of the most advanced miners out there is the Antminer S9. It’s what is known as an ASIC
mining rig. It has a mining rate of 14 TH/s. If we use the simple Bitcoin mining calculator (shown
above) you will see that at today’s difficultly you will earn around 1 Bitcoin a month.
But of course this doesn’t take into account the hardware cost, electricity cost, pool fees, etc. Let’s try
to calculate all of these together.