Bitcoin mining started of using CPUs during the early days. However, today you can use specialized bitcoin mining machines — ASICs (Application Specific Integrated Circuits). ASICs are super powerful yet more energy efficient machines than CPUs for minting bitcoins.
And as with any venture, you must determine if it’s profitable before you invest in a bitcoin mining equipment, right? Well, there are four essential factors — the bitcoin price, your miner hashrate, the Bitcoin network hashrate, and the electricity pricing (in your area) — that defines your endeavor’s profitability.
Let’s understand these factors and how they affect your profits in detail:
- Bitcoin price: Since the bitcoin price is totally uncontrollable, you can try to analyze its long-term value for starting a mining business. Of course, it is a crucial factor, so think about price expectations in the future.
- Miner hashrate: It is the efficiency or speed of the miner to solve the Bitcoin network problems. The miner solves the block problems — or complex mathematical computations — to find the next blocks in the network. A high hashrate miner has a high chance of solving the problems, sealing off the blocks, and thus collecting the block rewards.
- Network hashrate: It is the efficiency or speed of the network to solve the problems, i.e., the sum of all miners’ hashrates connected to the network. Bitcoin network attracts additional miners over time; hence, the mining difficulty constantly increases, lowering your profit with time.
- Electricity pricing: ASICs require a high amount of electricity to perform the required computations. It can cut down your profit margin if you live in a country or region where the electricity cost is high. Of course, varied miners utilize a different amount of electricity based per device.
Which is the perfect mining equipment?
An ideal mining equipment will offer a superb high hashrate while consuming almost zero electricity. Of course, it’s not feasible in the real world, but there are some near-to-perfect bitcoin mining hardware — our favorite bitcoin mining equipment — as listed below.
You can determine any bitcoin miner’s profitability using a mining profitability calculator as shared below. You must consider a logical and practical reason behind choosing a bitcoin miner since you cannot switch a mining device as easily as you can switch from an old to the latest smartphone.
Note for given profitability calculations
The profitability metrics given below are computed via Bitcoin Mining Profit Calculator from Bitcoin.com. They consider electricity cost at US$0.1 kW/hour and bitcoin prices at US$4,000 and US$6,000 and uses individual equipment’s hashrate and power usage.
