Is it profitable to mine Bitcoin at home?

Bitcoin is a decentralized alternative to a traditional economy. It doesn’t depend on a trusted central authority, instead of this Bitcoin network works with thousands of nodes which are responsible for updating special Bitcoin ledger — blockchain. This decentralized ledger contains information about all BTC transactions that were ever made. The rules of cryptocurrency network are dictated by its protocol, which was developed by anonymous Bitcoin creator Satoshi Nakamoto.

How does Bitcoin mining work?

Traditional currencies like dollar or euro are issued by central banks. Individuals or other organizations have no right to issue any currency that is used for buying goods or services. Such activity is considered illegal and shall be punished with imprisonment.

Bitcoin is different — new BTC coins are issued by individuals, who run Bitcoin mining equipment all around the world. Cryptocurrency has no central authority that is responsible for its issuance rate. This metric is set in the Bitcoin protocol and cannot be changed or cheated. Miners are rewarded new bitcoins every 10 minutes, for every mined block one can receive 12.5 BTC.

One single Bitcoin node can’t take control over the whole cryptocurrency network, but it has enough power to add new BTC transactions to the blockchain and therefore mine Bitcoin blocks. A block records most of the recent transactions, chosen from mempool (the list of all currently pending transactions). Practically, every block can be compared to a page of a ledger book.

A miner needs to solve the cryptographic puzzle also known as a hash to define a new block. Difficulty, block time and reward for this process are defined by Bitcoin protocol. In the first days of cryptocurrency, even a single enthusiast with one computer was able to find new Bitcoin blocks on his own. A few years later this business was recaptured by large industrial facilities, who stepped in the game. And that’s where Bitcoin mining at home became almost unprofitable. Why so?

All because of increasing hashrate — the measure of a miner’s computational power. It is measured in hash per second (H/s). Today huge mining facilities with tremendous amount of computational power operate with trillions of H/s. Hashrate grows because of new miners that joined “the golden rush” in the last few years. They are eager to buy and use Bitcoin mining equipment to receive potential profit, provided by mining pools.

Mining pool is the pooling of resources by miners who share the computational power of their equipment to find Bitcoin block. If pool mines the block successfully, it distributes block reward for every pool member according to his share in pools hashrate. As mentioned above, every Bitcoin block has a reward of 12.5 BTC. In 2020 block rewards will be halved and miners will receive twice fewer coins.

In other words, the more equipment you have, the more bitcoins you will receive. It might appear at first sight that Bitcoin mining is a free money printing tool. But there is one more metric, that makes “mining puzzle” harder to solve if more and more miners join the game with their equipment — mining difficulty. It adjusts every two weeks.

How to start mining bitcoins?

Most people have common misconceptions about fundamental principles of cryptocurrency. Even some major media portals spread outdated or even wrong guides on how to get started with Bitcoin mining. Nowadays, just one GPU (even most with the most up-to-date components) is not enough to get BTC.

As mentioned above, you need to have equipment with high computational power. Application-specific integrated circuits or ASICs have been considered as the most efficient type of equipment for Bitcoin mining since 2013. An ASIC hashrate is high enough to cover costs for electricity it spends and to bring you some profit. You can purchase equipment at Bitmain.com — the world’s most successful ASIC manufacturer.

Calculating mining profitability

Please note, that your potential profit cannot be reliably predicted due to the changing Bitcoin price and mining difficulty. Mining profitability calculators can show you potential profits if difficulty and BTC price stays fixed in the future. Let’s select the Antminer S9 SE as an example of our test rig.

Every ASIC has three main properties: price, hashrate and power consumption. S9 SE will cost you $622 for 16 TH/s of hashrate and 1280 watt power consumption. With these in mind, let’s use CryptoCompare to calculate our potential profit on the assumption, that electricity cost is $0.05 per KWh (a very low rate btw).

As you can see, one S9 SE can bring you about $80 per month. So, maybe you should jump into Bitcoin mining right after reading this article?

Think about it twice!

An ASIC is a relatively heavy piece of equipment that requires a good power supply, cooling and storage. Placing one in your apartment is a terrible idea. The noise level even from one working S9 SE will certainly bother your family members. One mining rig with ten working ASICs can cause serious problems even to your house electricity grid.

Sadly, a reliable outcome from Bitcoin mining business requires high investments. Huge mining rigs need to be placed in a separate place with a proper cooling system. Add here a rent, maintenance costs and a big headache from potential problems with your equipment. With this in mind, a mining business doesn’t seem an easy win. You may try another alternative — Bitcoin cloud mining services.

Hashmart provides you a possibility to safely invest in cryptocurrency mining without bothering for loud ASICs. Our service requires only simple internet connection to buy mining contracts. You can get your profit from our mining equipment at a reasonable rate. Cloud mining is the latest trend in the blockchain industry that allows everyone to make safe investment in their efforts and time.

Join Hashmart.io to start mining cryptocurrency right now!