Bitcoin 101

A guide on Bitcoin calculator for mining

A Bitcoin calculator for mining allows one to determine how much profit they can make from a given bitcoin miner. This device takes into account all the relevant costs involved like hardware, electricity and fees. Below we are going to look at the details required when one is trying to determine how profitable a mining venture can be.

Instructions on how to use a mining Bitcoin calculator

Bitcoin calculator

  • First of all, make sure you enter the hash rate of your Bitcoin mining hardware
  • Enter other additional information like electricity costs, pool fees and any other involved cost. But, not all fields are mandatory. The more information you enter, the more accurate your results are likely to be.
  • The results will be displayed automatically in USD. However, if you want to see a detailed calculation, you can click on show details.

It’s important to note

  • Some values like the exchange rate are updated automatically with the latest network stats. But, these can be adjusted manually to simulate scenarios. The revenue is displayed in USD based on the current exchange rate. Also, the exchange rate will change from time to time.
  • The revenue realised is based on the difficulty of mining bitcoins. The mining difficulty also changes from time to time.
  • The revenue generated is not profit. One has to still take into account the mining expenses like the electricity used to run the mining devices and cool them, also the cost of the mining hardware.

Using the Bitcoin calculator to calculate the mining profitability

First of all, it’s important to note that mining is the only way the Bitcoin network is secured. Without miners, there would be no one who updates the bitcoin ledger better known as the blockchain. The more miners that are on the network, the more decentralised and secure is the platform. Due to the crucial role the miners play, an incentive system was designed to motivate miners to participate in validating nodes and in return they are rewarded.

Each block that is mined by a miner contains a block reward. The reward is usually a fixed amount of Bitcoins that are paid out to the miner who successfully mined the block.

Today mining is very competitive however it’s possible to run a successful and profitable mining operation. In this post, we are going to look at various factors that determine if your mining operation will be beneficial or not.

Hardware costs

Bitcoin calculator

These costs represent the most significant expenses for any new mining operation. Just like good machines cost more money so does good mining hardware which is expensive. There are three main miner’s manufactures that currently, who supply miners with miners.

Its advisable before purchasing mining hardware to first look at the miner’s hash rate which is measured in Terra Hash (Th/s). The higher the hash rate, the more powerful the miner.

Miners also generate a lot of heat and need to be supplied with electricity. Therefore, they require cooling fans and power supplies. All devices you will have to purchase if you don’t have them. Make sure you add these on the hardware cost part.

Hardware efficiency

The Hash power alone doesn’t determine the quality of a miner. It’s the same way as to how cars are rated by their MPG (miles per gallon), so the value of miners is determined by the number of bitcoins they can yield based on the electricity they consume.

It’s important to note that miners consume a lot of electricity and electricity costs money. So ideally you need a miner that has a high hash rate but uses the provided electricity efficiently.

So to select a more efficient miner, consider taking a look at the W/Gh (watts per gigahash). The lower the number means, the more efficient the miner.

Electricity costs

It’s another factor that can make or break a mining operation. A huge monthly bill means there will be more cost added on top of your hardware cost.

There is a reason why 60 per cent of the global Bitcoin mining takes place in China. The electricity cost in the country is meagre.

Another country that has cheap electricity and this makes bitcoin ming very profitable is Venezuela.

There is also electric cost that is associated with cooling the mining hardware. Miners usually generate lots of heat during the mining process. So, insufficient cooling can impair the mining operation or can even lead to irreparable damage to the hardware.

The Bitcoin mining difficulty and the network hash power

The bitcoin mining difficulty ensures BTC blocks are mined on average after every 10 minutes. Higher difficulty means that stronger miners are at work.

The network’s difficulty and hash rate are external factors that have to be accounted.

Bitcoin price

It’s difficult to predict the bitcoin price since its very volatile. This is the one factor you can’t control since even if you were to use the Bitcoin calculator and calculate the price at X today, the next day the price could rise or drop to Y and this will significantly affect your profit.

Block reward

Bitcoin calculator

 

Unlike the price of BTC, the block reward is predictable. Every four years the amount of BTC awarded for each block that is successfully mined drops by half. What started as a reward of 50 bitcoins dropped to 25 BTC and currently is at 12.5 BTC.

So since with every halving the miners’ reward is cut by half, the increase in demand that results leads to the price of bitcoin rising and this helps keep mining profitable.

In conclusion, a Bitcoin calculator for mining helps one get a better idea about the potential of running a profitable mining operation. However, it’s important to remember that factors like mining difficulty and bitcoin price change every day and have a dramatic effect on profitability.

coinmag

Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of Blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology.

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