Is Bitcoin Mining Still Profitable in 2021?

Sep 15, 2021 08:09 PM ET
Is Bitcoin Mining Still Profitable in 2021?

Are you wondering if Bitcoin mining is still profitable in 2021? This article will cover the main considerations to observe. 

Cryptocurrencies are quite interesting in the numerous methods by which holders can earn them. Mining continues to be one of the most prominent and profitable channels for achieving this objective. 

Every new and even experienced mining hobbyist or full-timer has the luxury of numerous cryptocurrencies they could mine, but one continues holding the most attention; Bitcoin.

The landscape of Bitcoin has undergone several evolutions since its inception in 2009. When the project was still obscure and dirt-cheap, it was simple to earn BTC (50 of them at the time) using your average desktop computer. 

As more people slowly ventured into mining, miners began using graphics cards, which were more advanced than CPUs (central processing units). Things changed yet again circa 2013 with even more ultra-modern machines known as ASICs (application-specific integrated circuits).

These have become the standard for mining BTC ever since. The main issue is that such machines are very expensive, making mining for the average person less egalitarian.

The narrative with Bitcoin mining over the last few years consistently suggests a hyper-competitive industry dominated by Chinese groups with expensive, highly advanced machines located on massive specially-designed mining farms. 

Many have strongly believed simply buying BTC from an exchange might probably be more lucrative in the long run than mining the coin itself. Hence, for the average Joe, it begs the question, is Bitcoin mining still profitable in 2021? 

The short answer is yes; it’s always been profitable to mine Bitcoin. But, of course, it’s more complicated than that. 

Looking at the mining costs and rewards of Bitcoin        

As with mining any cryptocurrency, miners consider the costs behind this venture. Bitcoin is an exceptional case as the most liquid cryptocurrency globally.

One of the barriers to entry for most people with Bitcoin mining is the cost of buying the necessary computer. 

Machine costs

As briefly mentioned, the scale of equipment for most mining starts from CPUs to ASICs. These increase in specifications and their ability to solve blocks the quickest. 

As one would have it, ASICs possess the most advanced technology and can solve such blocks at astronomically faster rates than any other machine. Needless to say, as Bitcoin is the most valuable digital coin, no miner stands even a tiny chance to turn a profit using anything less than an ASIC.

Yet, the main barrier with ASICs is the cost. According to Buy Bitcoin Worldwide’s website, the cheapest ASIC miner, MicroBT’s WhatsMiner M30S+, would set you back $2250 on average. Of course, this cost is not the only one to consider, but it is undoubtedly the heaviest.

Electricity costs

The second piece of the puzzle is electricity consumption. It’s a well-known fact Bitcoin mining consumes substantial amounts of energy due to the several thousands of watts consumed by the machines.

Most Bitcoin mining occurs in China (which controls the vast majority of the network hash rate) since this country has one of the lowest per kWh rates globally. Other nations with relatively low figures include Malta, United States, Czech Republic, and Japan, all countries with the most miners after China.

Hence, the cheaper your power costs are, the more profit you stand to make. According to ElectricRate.com, the average kWh rate globally is about $0.14, which is an accurate benchmark to determine whether a miner stands a decent chance to succeed in mining.

Another consideration to observe is the electricity to cool the machines, particularly during hotter seasons. This element would certainly increase the costs. Sadly, it’s challenging to have an estimate here, unlike the actual mining. 

Yet, it’s undoubtedly an observation worth noting and will impact a miner’s profits. One reason why Bitcoin has fewer at-home miners globally for Bitcoin is due to the electricity and machine costs.

Example of potential profits using a calculator

Using the information above, we can estimate how much profit a miner with one ASIC machine, the MicroBT’s WhatsMiner M30S+, could make within one year. It’s key to note mining is a long-term investment.

Miners don’t necessarily mine for daily income but consider the prolonged potential value increase of the coin through HODLing. Needless to say, numerous forecasting sites predict Bitcoin will probably be higher in price in a year’s time.

This calculation is only an estimate as it doesn’t fully consider your personal circumstances and the mining difficulty. On some days, miners may earn more BTC and, in others, make less depending on how many miners are on the network. 

Nonetheless, we’ve chosen one of the most accurate calculators from Buy Bitcoin Worldwide, which is more conservative than the others. Let’s first consider the main specs of the MicroBT’s WhatsMiner M30S+:

  • Average cost: $2250
  • Power consumption: 3420w
  • Hash rate: 100 TH/s
  • Average kWh consumption globally: $0.14

 

Image showing the estimated profit from mining BTC based on the previous estimates

The calculator shows a $1737 profit in a year after factoring in the electricity charges. 

What if you just bought BTC outright instead of mining?

You may be wondering whether you could make similar gains if you just bought the coin using the $2250. It’s an argument often raised by experts who consider the time-consuming and expensive mining process as unworthwhile.

Let’s assume you spent this entire investment and purchased Bitcoin at the current price of $44,398, giving you a total of 0.05 BTC. Let’s also imagine the price increased to $100 000 after a year. 

Your $0.05 BTC would be worth $5000, leaving you with a profit of $2750 (subtracting the $5000 from $2250). At first glance, the $2750 is clearly higher than the $1737 gain in the calculator. 

Yet, through mining, you could own 0.13 BTC after a year instead of 0.05, providing you with a more substantial gain. To illustrate, 0.13 BTC with a $100 000 valuation would be worth $13 000 (instead of $5000). 

Moreover, another incentive for mining is receiving transaction fees for each block solved, which is between 5% to 10% of the reward. 

Final word

The examples above demonstrate that Bitcoin mining is still profitable, though you must factor in many things. Mining revenue has to considerably outweigh the machine, electricity, and maintenance to gain a profit.

These are factors any potential miner would need to consider thoroughly before investing. Nowadays, as the competition for Bitcoin mining is at its peak, most miners join mining pools to share computational power allowing them the best chance of solving the blocks. 

Such groups charge a small percentage of the reward, typically not above 5%. Overall, assuming one is prepared to take the risk and has a bit of computer savvy, it’s possible to make more from mining BTC than buying it from an exchange, assuming you can recover all costs from the rewards.


Don't miss: The Best Forex Robots in 2021

Best Forex Robots

Best Forex Brokers