Will Bitcoin mining still be profitable in 2021?

in LeoFinancelast month

If you can get cheap hardware/electricity, then Bitcoin mining is still a profitable job.


In short
, the price of Bitcoin has soared by more than 340% in the past year.
In the past year, Bitcoin's hash rate has increased by more than 41%, reaching its highest value ever in January 2021, putting this at a disadvantage for smaller Bitcoin miners.
The profitability of Bitcoin mining can be attributed to hardware purchase and operating costs. At present, the daily rate of return of most modern miners is net positive.

Since the price of Bitcoin (BTC) fell to only $5,000 a year ago, it has been showing a rapid upward trend.


At the same time, Bitcoin has a higher hash rate than Bitcoin.
Because all these factors coincide with each other, it is difficult to know whether Bitcoin mining will still be profitable in 2021. This is what you need to know.

Mining difficulty will increase over time

One of the main issues that miners need to consider when mining Bitcoin is the change in difficulty. In short, the difficulty of Bitcoin determines how much effort miners need to invest in solving complex mathematical problems, which will enable them to add new transaction blocks to the blockchain.

This difficulty increases or decreases after every 2016 blocks or approximately every 14 days, depending on how fast the previous 2016 blocks were discovered. If the previous block discovery time in 2016 is less than 14 days, the difficulty will increase, and if the discovery time exceeds 14 days, the difficulty will decrease. The goal is to restore the average block discovery time to 10 minutes.

Since the hash rate tends to increase over time, the difficulty of block discovery also increases, which in turn makes it harder for miners with older hardware to keep up, because their total hash rate accounts for The ratio decreases over time and becomes more difficult. However, since the price of Bitcoin tends to rise as the hash rate increases, an increase in difficulty does not always mean a decrease in profitability. Miners can also take some measures to accelerate their return on investment (ROI) and maximize profits.

The profitability of Bitcoin mining depends on several factors

The best way to stay at the top of the difficult curve and maximize profitability is to buy the latest and most efficient mining hardware at a fair price.

Those who wish to make a profit by investing in new mining hardware need to consider the price and transportation costs (and any potential delays), import taxes and the electricity bills involved in purchasing and operating the new hardware. The ideal Bitcoin miner is both energy efficient and offers excellent price/performance ratio in terms of hash rate output.

According to the data from CryptoCompare's mining profitability calculator, based on the current value of Bitcoin ($38,560), a hash rate of 1 TH/s will generate about 0.00000613 BTC, or about $0.236 in profit per day. Therefore, a 73 TH/s Antminer S17+ can earn approximately US$17.23 per day, and a 112TH/s S30 M++ can earn approximately US$26.43 per day.

If you are using Bitmain's latest Antminer S19 95 TH/s device, then at the current level of difficulty, your daily rent is approximately $22.42/day.

However, Bitcoin miners need to deduct their electricity and maintenance costs, which can vary greatly depending on the country and energy supply they can obtain.

Assuming that the average power consumption is 30W/TH/s and the average electricity bill is $0.10/KW, Bitcoin miners can pay close to $0.072 in mining electricity bills per day. The price of the Antminer for 73 TH/s is $5.26, and the price for the 112TH/s is $8.10.

This means that Bitcoin miners can expect to use modern hardware to generate approximately 226% of profits per day over operating costs. Since electricity costs account for a significant portion of Bitcoin mining profits, ensuring low-cost energy plans or establishing electricity in areas with lower electricity costs is the fastest way to increase profitability.

Miners also need to consider their acquisition costs to determine the time required to obtain the full return on investment. Mining hardware purchased before the original purchase date of RRP or below will usually pay for itself faster than those purchased later.

Since almost all current generation Bitcoin miners have spent thousands of dollars, it is safe to say that most miners will take at least a few months to get the full return on investment, but when buying new equipment, they can sell second-hand miners. Recover part of the initial cost.
In addition, by using cloud mining services, investing in mining company stocks or holding hash rate tokens (such as Poolin’s pBTC35A or Binance), you can avoid a large amount of upfront costs and maintenance costs, while still being able to mine the potential of Bitcoin Benefit from profitability.

However, the profitability of these alternatives may vary greatly and may not be greater than conventional mining.

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