The short answer is no for most people. The long answer is that it’s possible, but you will have to decide based on your current situation if the effort is really worth your time. We want to provide our readers with the best possible ways for obtaining as much Bitcoin as they can. Bitcoin mining is at least worth considering before making a final decision. Because of how capital intensive a mining operation can be, along with a slight learning curve for those who are not the most tech-savvy, we strongly advise against mining for the majority of people. However, there are a few reasons to get involved in the mining space if you are truly interested in learning how to set up and operate a mining rig. This is a chance to earn some “passive” satoshis and contribute to the Bitcoin network. However, like any startup business, do not expect profits unless you’re willing to commit the necessary time and work needed to gain a competitive edge against your competition. Do not forget that people around the world are competing against one another to collect as much Bitcoin as they can through mining. They will not make it easy for new miners.
What is Bitcoin mining?
The banker role in a poker game is somewhat similar to how a miner or a full node acts within the Bitcoin network. The three are essentially auditors who verify that the transactions being made are in fact legitimate. To cheat or manipulate the data on the network or in a poker game would mean expulsion from participating. In poker, the banker ensures that all transactions of chips are executed. This occurs during the game so that all who are involved may see how much is being exchanged. Bankers have the responsibility of checking the integrity of players while maintaining the game ledger.
In Bitcoin, there are multiple “bankers” participating in the network. We need both miners and nodes to take on the “banker” role. A full node stores the entire Bitcoin transaction history while a miner will create a new block (similar to a page in a book) that is added to the ledger, also commonly known as the blockchain. By solving a combination of complex math problems (also known as proof of work) and acting as an auditor for the most recent block, miners are able to verify the credibility of the blockchain without a centralized third-party. Depending on the block height (or block number), the miner will be rewarded with a specific amount of Bitcoin. After the 2020 halving, the Bitcoin reward per block is now 6.25 BTC.
Bitcoin Mining Farm (left) versus Bitcoin Full Node (right)
How would I start?
Keep in mind that a lot of research on your end is necessary to fully understand what is involved in the mining space but we will provide some resources to begin your journey.
Bitcoin hash rate
Hash rate is the number of calculations being made per second on a miner. This is important to know because as more people turn on their mining rigs, the hash rate rises and prompts the difficulty to increase. This guarantees higher security within the network because it is much harder and more expensive to take over the hash rate if it keeps increasing. A 51% attack on the Bitcoin network would enable a group or organization to double-spend, a term used when transactions are falsified and where the attacker’s Bitcoin may be “duplicated” through a hardfork. An attacker will only have the ability to reverse transactions from their own wallet but cannot adjust the block reward, create Bitcoin out of thin air, or steal coins that do not belong to them. As seen in the chart below, this insidious behavior is less and less likely to happen as time goes on and more miners join the network.
Miner fees are also another way for miners to generate revenue. When a Bitcoin user transfers their Bitcoin across the network, they must pay a certain amount of satoshis for their transaction to be verified and included in a recent block. Bitcoiners are able to set their own pricing for fees but if the fee is set too low, they will have to wait much longer than others who are willing to pay more. If you decide to mine in a pool, you may be less concerned with mining fees and more interested in having your hash power “rented” by mining pools. Please be aware that miner fees alone would not be able to support most mining businesses.
Nicehash is a great tool that will help users determine how profitable their GPUs (graphics cards) are for mining pools. Mining pools enable individuals to group their hashing power for a higher probability of successfully mining blocks. By combining the hash rate of multiple miners, more computing power can be devoted to solving a higher number of computations per second while an individual miner may never receive a block reward. Once blocks are mined, the profits within the mining pool are distributed among the participants. A single graphics card would receive about $1-$5 USD per day depending on the hardware being used in a miner’s computer. Also keep in mind that if you join a mining pool, you may never end up actually mining Bitcoin itself but instead mine the most profitable altcoin and then receive payment in Bitcoin.
AsicMinerValue is reliable for having the most up to date profitability for ASIC miners. In contrast to mining with a home computer, ASIC (application-specific integrated circuit) miner equipment is solely used for the purpose of mining Bitcoin. The cost for purchasing one is at par or higher than a normal gaming computer but the profits are much higher.
Let’s run some numbers
Running a GPU:
Using one 1080 ti GPU for mining would currently cost about $800-$900 from Newegg. By checking Nicehash, about $1-$2 could be paid out per day. This would mean that you would need about 400-900 days of mining to just pay off the GPU. These calculations do not include the costs of other parts for the computer, the electric bills, and the fluctuating payments from Nicehash. It could be anywhere from 1-3 years before you see a return on that one graphics card. The best part of this situation is if you do stop mining, at least you will be able to play a ton of graphic intensive video games.
Running an ASIC miner:
Using the most profitable miner, the Bitmain Antminer Z15, one would be able to currently receive $15-$20 a day. They are currently sold out on the main site. Pricing may be anywhere from $1,800-$6,200. Given these numbers, it may take anywhere from 4 to 11 months before you see a profit. Whether or not this works for your budget and time frame is up to you.
Price per kWh will depend on your area and what is stated on your electric bill. Hopefully you live in a state with low rates. You will want to avoid states like New York because it is about 21 cents per kWh while the national average in the US is about 14 cents per kWh. You may either use the Nicehash calculator to quickly determine the electric costs which will then be subtracted from your daily payout. The other way to determine utility costs is to look up on the manufacturer’s website the amount of electricity that your miner or GPU (along with the other parts of your computer) requires. If you are lucky enough to have a living situation where you do not have to pay for electricity, mining is definitely something to consider. However keep in mind that the electrical bill will significantly increase.
To find a rough estimate of power consumption and costs for a 1080 ti GPU you can check on the Nvidia website where it states that the card alone is 250 W. From there you can use this Watts to kWh calculator to determine that 250 W for 24 hours will net 6 kWh per day. If you live in New York City, you can multiply 6 times $0.21 which will give you a total of $1.26 per day for electric costs. Depending on the payouts from Nicehash, you could receive $1-$2 per day. All in all, It is barely worth mining on a GPU in New York City but if you live in an area where the costs are 14 cents per kWh, then your expenses are cut nearly in half.
For the highest profits, here is a short list of what to avoid:
-Paying for electricity.
-Cloud mining or investing in mining operations outside of your control.
The most ideal situation to be a miner:
-If you are not interested in profiting from your efforts and want to pick up mining as a hobby with a custom built computer.
-If you have access to cheap power.
-If you have access to wasted energy in the oil and gas industry, you would be able to syphon off some of that excess energy by implementing a miner to mitigate flaring. This would be the most ideal situation but it is not a common one.
Buy from exchanges instead
Unless you are able to come up with large sums of money to invest in all of the required equipment and somehow find a facility with free electricity and air conditioning, it is extremely hard for most people to live off of mining profits. A lot of new entrants into the space may feel inclined to ignore the warnings from those who tried, but if you are able to run the numbers, you may be able to save a lot of time by simply buying Bitcoin directly from an exchange instead.