About
You've got to ask yourself one question, do you feel lucky? Well do ya, punk?
ASIC miners are profitable only if they produce more BTC than what they cost to purchase and run.
If you buy 1 miner for 1 BTC and after 3 years it produces .9 BTC the miner has not returned its inititial investment (ROI) in that time period, regardless of how well BTC did. You end with less BTC than you started with. You would have been better off buying BTC. You want to see in the calculation that the Number of months to break even is valued. But remember, that is only the break even date, then look at the remaining months to see how much BTC will be profit.
There are many online calculators out there that have exaggerated claims of profitability. The worst of them do not account for the historical rise of difficulty, which runs at over 4.5% per month. Many of the rest ignore pool fees, expected downtime, the halving in early 2024 and the effects of inflation on electricity prices. Each of these drives the profitability down.
Warnings
Objects in the rear view mirror only show where you have been.
Bitcoin has now been around for over a decade. Past trends can be extrapolated into the future to see how well bitcoing mining were to fare if those trends continued. Remember, trends are not price predictions. this tool is only useful looking at a longer term. The term I have selected is 42 months, which is 3 years of mining, plus a start up delay of up to 6 months. I figure that the value of the assumptions gets weaker with time, so 42 months is a reasonable cut-off. Any shorter than 12 or 24 months and there is not enough time for the trends to appear out of the short term noise.
Any model is unrealistic and this is no exception, the variables in this calculation will not progress at an even rate, but this is only an attempt to avoid smoking hopium.
Miner Cost in BTC
Your finger is hovering over the purchase button on Alibaba or Compass mining, about to spend a little more than you hoped in USD to buy that S19j Pro Hydrowatt XP with a hashrate of 250 TH/s. You think you've done your research completely but then you realize you forgot one key question - How much does this miner cost in bitcoin and how much bitcoin will it produce? To convert the miner price in USD to BTC, you divide the miner price in USD by the current BTC/USD price, for instance, a $15,000 miner with BTC at $60,000 results in a the miner cost of .25 BTC.
Bitcoin Prices in USD
Historically, on average, Bitcoin value in USD has doubled every 12 months. But what will bitcoin do in the next 3 - 4 years? It is anybody's guess. If you are thinking about mining, you are optimistic about BTC continuing to go up in the longer term. But when looking at the next 3 - 4 years, you need to ask if we are currently at the peak of a bull market with an imminent crash, or are we merely a portion of the way up to the top of the current cycle? If you used a BTC Price increase of 6% per month it would double every 12 months. Do you think it will double every 12 months for 3 years? That would be 8x today's price! The calculator defaults to 2% monthly increase, which ends up being about 25% after a year, and doubling after about 3 years.
The calculator only uses the BTC price to determine the amount of bitcoin to be sold to pay for electrictiy.
Difficulty
Difficulty is the relentless dragon that destroys many dreams of BTC mining profitability. Historically on average it has gone up around 4.6% per month. If difficulty goes up by 4.6% in a month, your BTC mined drops by 4.6% for that month. 4.6% per month results in a difficulty increase of over 70% per year. Difficulty does not always go up, but on average it does. The last significant drop was when China banned Bitcoin mining in early 2021. Since then it has increased at around 9% per month.
Difficulty trend for the past 3 years - https://bitinfocharts.com/comparison/bitcoin-difficulty.html#3y
Estimated next difficulty - https://www.bitrawr.com/difficulty-estimator
The calculator defaults to 4.6% and now I'm thinking 5% may be more appropriate.
Electricity
With free electricity, there is no correlation between BTC price and mining results. Most people do not have free electricity so it is important to understand the how BTC price in USD effects the profitability of BTC mining. We make the assumption that electricity will be paid via mining rewards, i.e., once a miner is purchased and running, it pays for its own operating expenses. If BTC goes up in USD, that means that the electricity fee has gone down in BTC and vice-versa.
Example: BTC is at $60,000
Electricity is $150 per month
Electricity is .0025 BTC per month ($150/$60,000)
If BTC soars to $120,000
Electricity remains $150 per month
Electricity is now .00125 BTC per month. ($150/$120,000)
If BTC crashed to $30,000
Electricity remains $150 per month
Electricity is now .005 BTC per month ($150/$30,000)
A high BTC price will make your miner more profitable in BTC terms, you basically win twice, once for increased BTC, and once for the value of that BTC going up.
A low BTC price will make your miner less profitable, you lose twice, once for decreased Net BTC and a lower value of that BTC.
The caveats to this is that the higher or lower BTC price only affects the profitability at the time of the payment of the electric bill each month.
If the electricty costs more than the BTC mined, the miner is then shut down and the calculations stop.
As of the time of this writing, November 2021, inflation in the USA has come back, the current projections are that prices are going up by about 7% per year. This calculator increases the electricity price in annual steps at the inflation rate entered.
The Halving
Every 4 years the block rewards for BTC mining gets cut in half. The last halving was in 2020 which brought the mining reward to its current level of 6.25. The next halving is expected in April 2024 which will bring the mining reward to 3.125.
Downtime
Do not expect your miner to be working 100% of the time. There are power outages that can occur, also, your miner may need repairs. Sometimes outages can be for days. Sometimes repairs can take weeks. A miner down for 1 day in a month is down for over 3% of that month.
What is a fair downtime percent? I don't know, I use 2%. I may be smoking hopium myself.
Pools
Pool fees vary, 2.5% is common.
Residual Value of Miner
At some point you may own a miner that is no longer profitable at your electricity rate, and it can be sold to someone that has access to cheaper electricity. The amount someone is willing to pay is called the Residual Value. I have considered including this but I can not see any way to project the value of a miner 42 months from now, so it is not included.
SmokingHopium Accolades
Anyone who thinks mining is buy, set and forget is going to end up making calculators telling everyone else they're getting screwed - @R3ctHAMwrangl3r
Possibly the best mining calculator I have found - u/Adventurous-Nothing4 -
At the end of the day, being a bitcoin miner means you're an optimist, and this calculator is a cynic - u/Mystere_Miner
