So, you are finally ready to go into bitcoin mining? How about we do some bitcoin mining profitability calculations before you get that brand new bitcoin miner?
Bitcoin mining can be a hugely rewarding exercise. It can also be fastest way to wash your money down the drain if you don’t get certain things right.
Factors to Consider
The cost of electricity in your locality is one of the biggest factors that determine whether bitcoin mining will be profitable. With increasing bitcoin mining difficulty, the computing power needed to solve complex mathematical problems needed to verify transactions has been going up significantly. Electricity costs have been rising as a consequence.
Your prospects of making a profit are therefore much higher if you live in countries like China or Canada where electricity is much cheaper.
To give you an idea, bitcoin mining now consumes about the same power as entire countries like Austria according to a recent study.
Apart from the cost of electricity, there are equally important things like your miner’s hashpower and efficiency. Then there is the price of bitcoin to consider. High prices generally increase your chances of turning in a profit and vice versa.
A bitcoin mining calculator takes all these factors and much more into consideration and gives you a fair estimate of your profit.
Mining hash calculator
In general, a good calculator will factor in bitcoin network’s hashrate. Simply put, this is total amount of power needed to run the network. A good bitcoin hash rate calculator will include this. This figure usually goes up over time and a hashing power calculator will constantly update this.
As we have seen, a bitcoin mining profitability calculator is several things in one. Mostly, it is a bitcoin mining electricity calculator and bitcoin hash calculator all rolled into one.
Good bitcoin mining profitability calculators will also give you profitability estimates for other altcoins as well. Whattomine.com for example integrates a litecoin miner calculator so you can compare with other miners.
This calculator also compares several types of miners in terms of their profitability to help you choose the best. Whattomine.com also has various columns to cater for the various algorithms.
Hash per second calculator
All you need to do is enter the hashrate of your bitcoin miner. This is usually given in GH/s. A higher hashrate means the miner is more powerful. A hash to bitcoin calculator will translate your hashpower to bitcoin. You will sometimes find this being referred to as m hash s calculator or mhash s calculator.
The other thing you need to know is the cost of electricity in your locality. This is perhaps the most important factor and you need to get this right.
Next you need to check your miner’s efficiency. This is given in W/GH. The higher the efficiency, the better. This simply means your miner will do more work with less electricity.
Bitcoin mining calculators usually display the price of bitcoin on the side for easy reference.
Cost of Mining Hardware
You also need to factor in the cost of acquiring new bitcoin mining hardware. Most ASIC miners currently sell anywhere between $500 and $2500. The more efficient ones are obviously more expensive. This will be your largest single expense.
Other Factors to Consider
Bitcoin miners generate a lot of heat. That’s why you also need to factor in cooling costs. If you live in cold areas, you can use the excess heat for example to heat your house.
As more miners join the network, the network difficulty will go up. This means more hashpower will be required. In this case you will mine less bitcoins with the same hardware.
Also keep in mind the fact that the number of block rewards will half every four years.
Bitcoin mining calculators will help you estimate your bitcoin mining profitability. However, factors like mining difficulty and bitcoin prices are difficult to predict.
If your calculations don’t work out, you can always buy bitcoin from an exchange.