What is This?

Cryptocurrency Mining Profits Are Way Down

(Photo by S3studio/Getty Images)

Mining of bitcoin (BTC) or altcoins is a niche by the highly active segment of cryptocurrency. Mining is the way a certain kind of blockchain pays for participants to maintain it, its integrity and records, by paying ‘miners’ in the blockchains own coins.

Bitcoin, for example, currently pays out 12.5 coins for every block that is processed to the ‘miner’ that solves the puzzle necessary to unlock the job. It also hands over the transaction fees internal to that block record to the miner. This might add several bitcoin to the total.

Right now if you mined a bitcoin block, with two bitcoin of transaction fees you would get a mining payout of 14.5 BTC worth--a reward at current rates of roughly $92,000.

You can consider the mining reward as being 14.5BTC or $92,000 but you can rest assured that most people care more about $92,000 than the BTC count as for a start they will have to pay a huge electricity bill in fiat.

Mining rewards, in the sense of the native coins issued by the blockchain, are meant to have some kind of stability but the real outcome is not stable at all. Mining rewards fluctuate in several dimensions. The idea is that a coin like bitcoin has a constant issuance so the effort necessary to create a block changes with the effort being put in chasing new coins to smooth the production of new coins. This smoothing can be very jagged indeed.

After a number of blocks has been created the blockchain calculates a new puzzle hurdle of effort needed to get to make a block, this is known as the mining difficulty. This retargeting can be fast or slow and in bitcoin’s case it is slow. The amount of coins handed out  can also change over time, in the case of bitcoin the amount of coin issued for a block halves periodically, the next halving likely in just under two years.

Difficulty can rocket up if it suddenly gets hit by lots of mining power. The coins winnable by a given mining power will therefore drop, but likely as not, the increase in mining power may come from a demand for the coin and therefore a price rise may compensate the miner in dollar terms.

With so many variables at play, the real ‘mining reward’ that matters is how much money you are going to make mining and I denominate that not in BTC or altcoins mined but in dollars and that depends on a confluence of coin market price and the power of your mining rigs. This income will fluctuate dynamically dependant on all sorts of other permutations, which amounts to an outcome best looked at in a stochastic way or at least as some kind of optimization.

Simplifying matters, you can look at the various mining profit calculators, some more accurate than others, and see what your equipment will be earning you.

Here is my mining rewards page:


And you can find more examples and coins here:



When the market is hot, a GPU or ASIC will earn you a lot of money every day; when the market slumps, the chances are your equipment’s income will sag a lot, it can even become unprofitable. These earnings are not only driven by the market but also by people hiring mining rigs to grab coins off market and this in turn ends up eventually as diffusion in the market price.

It seems a spike in mining rewards for a coin is a good indicator of its future direction, especially if the reward for renting rigs out for mining that coin moves sharply.

The mining pool market is populated by tens of thousands of miners selling their equipment’s processing power (hash rate) to buyers that want to convert their money to cryptocurrency outside of an exchange.

An exchange may only offer limited supply liquidity in some coins and the only way to get more coins in that cryptocurrency, without spiking the price, is to rent mining power to mine them directly. There are many reasons to buy ‘hash rate’ to get coins by mining and of course not all of them honest and it is a flourishing market where the prices for hash rates is liquid and translate in real time into an indicator of the bullishness or bearishness of the market.

Right now mining rewards are all over the map but it is fair to say they are on average very low indeed, as low as the initial Bitcoin crash low earlier this year. In a couple of weeks, they have more than halved and have rallied and slumped as recent days passed.

This general slump has to be a bearish indicator. A sudden rise would be a bullish indicator.

Real money mining rewards are a clear indicator of the strength and health of the cryptomarket because large sums of fiat flow through the channels of mining. What is more important is they seem to often be a leading indicator.

Whereas there is without doubt lots of flim-flam in the cryptocurrency space, especially in non-minable coins and tokens, mining is real, costs money, takes effort and skill and cant be faked. As such it is a solid signal of what is going on under the hood of the market.

Right now the market for mining is shaky but how could it be otherwise with the price of Bitcoin in the low 6,000s and looking likely to take another leg down.

If you want a leading indicator, mining is it and right now is still says, ‘look out below.’

While novices rail against the trend, the challenge in markets is to buy near the bottom and sell near the top. Nothing beats a leading indicator to help in this process and mining rewards is one of them.

The bottom is coming, likely this summer, and when it comes it will be time to buy. I do not think that time is now and the amount my rigs can earn right now underlines that the market is weak.

If it suddenly get stronger, you’ll be the first to hear.


Clem Chambers is the CEO of private investors Web site ADVFN.com and author of Be Rich, The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide.