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The profitability of a Bitcoin mining venture is determined by some factors. The most important factor of them all is the very price of Bitcoin. When the price of Bitcoin is high, mining becomes easier than when the price is low. This is because of the high cost involved in mining new blocks. A comfortable Bitcoin price will suffice for the cost involved in the mining process and ensure a good return for the miners.
The cost of mining Bitcoin varies across different countries. For instance, in countries like Kuwait, it would cost about $1,400, while in countries like Venezuela, the cost could be as high as $240,000. The Average cost for mining BTC, based on the analysis of about 198 countries, sits at $35,000 per coin. And this is recent data – precisely from some research carried out in August.
The other Factors That Determine the Profitability of Bitcoin
Hashrate
By hashrate, we mean the total combined calculating power (that is, the amount and quality of computers) available for the creation of new blocks on the Bitcoin network. The quality of hashrate determines security on the bitcoin network. The higher the hashrate, the safer the network. When the hashrate is high, it makes it hard and impossible for bad actors (on the network) to manipulate transactions for their selfish gain.
The hashrate of Bitcoin is increasing on a yearly basis, this is because, miners are investing in newer, better, and faster mining devices. Currently, Bitcoin has a total amount of 270 Terahashes (TH/s). That is about 75% yearly growth. Even in the previous month, the hashrate exceeded 300TH/s, which is an all-time high.
The high hashrate indicates that people still have faith in the network, despite the crisis faced by the crypto industry this year. Miners are upgrading their calculating devices for optimum performance. A mining firm with a greater amount of hashrates can generate more amount of Bitcoin. And that means an increase in the profitability of the firm.
Difficulty
This refers to how difficult it is for nodes on the network to solve complex mathematics involved in the creation of new blocks. The difficulty level is directly affected by the number of miners on the network and the increasing amount of quality hardware used for mining. In November, the Bitcoin mining difficulty level was at its all-time high of about 37 trillion. The higher the difficulty level, the harder it becomes to mine new blocks. And that adds to the value of the mined coin. This is good because the valuable coin will help miners cover expenses incurred during the mining process.
Electricity
Bitcoin mining is electricity-intensive, therefore, it is an important factor that affects the profitability of Bitcoin. The expert believes that for every Bitcoin transaction, 1204.11KWh of electricity is needed. This same amount of energy is sufficient to last an average American home for more than a month. On a yearly basis, bitcoin consumes 116.28TWh of electricity. That is equivalent to the total power consumed in Pakistan for a year. Because of this, mining firms should be sited in places with cheaper cost of electricity, so that by minimizing the expenditures of electricity bills, the firms can maximize profits. The ASICs machine is the latest generation and best-performing mining machine. It is specifically designed and optimized for the task of mining crypto.
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