Bitcoin mining is an extremely profitable investment for those who approach it correctly and invest at the right times. But making money with your Bitcoin miners isn't always a streamlined process. For a Bitcoin mining operation to be profitable and efficient, a considerable amount of planning needs to be thought through. Whether you're new to Bitcoin mining (If so, read our post What Is Bitcoin Mining Actually Doing?), or you've been at it for a while, being profitable is obviously the main determinant. So how can you always make sure you're making money with Bitcoin mining? In order to better answer that question, we need to look at all the variables.
The Costs Associated With Bitcoin Mining?
First is the cost of your Bitcoin mining hardware. Bitcoin miners can range from $200 for a used Bitmain S9 Bitcoin Miner, all the way to $9,000 for a Bitfury Tardis B8. The bear market has created a timely investment opportunity by drastically reducing the cost of Bitcoin mining hardware. The Bitmain S9 Bitcoin miner went for over $5,000 at the market's peak, they now sell for less than $500 new. To learn more mining hardware, read our post about The Best Bitcoin Mining Hardware of 2019.
Second is the cost of your electricity to keep your Bitcoin mining hardware running. This is by far the most important factor to a profitable mining operation as Bitcoin miners require a substantial amount of power. To be profitable with Bitcoin mining, your miners need to produce more Bitcoin per month than your monthly operation costs to run the hardware. To achieve this you'll need to partner with a mining hosting provider or have access to a cheap enough power rate.
These two are the most important, but you'll also have to consider things like the cost of keeping your hardware cool. Storage costs can play a role as well if you're unable to maintain a mining rig in your living space. Most reputable hosting providers include storage, security, and cooling in their hosting rate.
It's hard to put forth a definitive “formula” for profiting with Bitcoin mining, and the topic is regularly debated. There are, however, some general guidelines and actions one can take to ensure their rig is always pumping your wallet as full as possible. If you are still new to the game, read our post How To Mine Bitcoin.
Step 1 – Purchase Cost Effective Bitcoin Mining Hardware
Start maximizing your profit right from the beginning. Purchase hardware that will give you the best bang for your budget, aka the best price per hash. You can easily find new Bitcoin mining hardware on Miningstore.com, or you can purchase used hardware from the massive resale market. The Antminer S9 is a great place to start, giving you a solid hashrate and low-cost without weighing too heavily on your electricity bill. Produced by Bitmain, the Antminer line is incredibly popular for Bitcoin mining rigs.
Choosing efficient hardware over higher performance hardware can ensure your startup budget doesn't get out of hand and sets you up to scale later. Always pay attention to hashrate versus power consumption. That's where your profits lie.
Bitmain's Z9 Mini Z-Cash Miner. A popular choice among the mining community due to it's extremely low power draw.
Step 2 – Minimize Electricity Costs
Electricity will always be a huge part of your overhead. Partnering with a hosting provider with the infrastructure to host your Bitcoin miners at extremely low rates is the biggest determinant on your mining profitability.
But how can you lock-down a power cost that makes it profitable to mine? Well, unless you have access to sub $.06 power, which is far below the national average, we recommend finding a hosting provider that has the infrastructure to host miners at extremely low rates. These facilities are usually sub-stations or power plants where power can be drawn directly from the grid rather than being dropped down like your typical colocation hosting provider.
Industry-leading hosting providers, like MiningStore, are starting to draw power directly from the source with the use of shipping containers. Mining in shipping containers is very tricky, but with the right design, they can offer a truly plug'n'mine, mobile hosting center. The mobility allows for power to be drawn adjacent to the source of creation which reduces operational costs and increases power efficiency.
Step 3 – Climate control
In order for your mining hardware to run at maximum efficiency and produce the best mining returns, you'll need to ensure they are kept cool and dry. Being in a geographically cool region can in itself increase your profit margin and extend the lifespan of your Bitcoin mining hardware.
Before committing to a hosting provider, make sure they have a well-designed environment for air-flow, humidity control, and temperature monitoring. Ideally, your hosting provider has extensive experience in not only cryptocurrency mining but also with IT operations management.
Step 4 – Watch the Bitcoin mining difficulty
The more miners there are competing to solve algorithms on the blockchain, the harder it can become to win the block and earn rewards. As the mining difficulty rises, your profits will drop as you spend the same amount on electricity to obtain less Bitcoin. Although, Bitcoin mining difficulty typically correlates with the Bitcoin price. This means even if you are producing less Bitcoin, the higher value could still ensure profitability.
Adversely, difficulty decreases when Bitcoin's price decreases. This means you may be producing more Bitcoin but the price could cause your mining operation to be unprofitable. This can be a huge advantage if you can secure a low enough power cost that ensures you are profitable in a bear market. You are competing against far fewer miners to earn the reward and can accumulate Bitcoin at a low-cost.
Many miners will turn off their rigs when the difficulty pushes too high in order to protect their margins. If it rises too high, one can risk running an unprofitable machine that will end up costing more to run than the Bitcoin it generates is worth. Some will argue that this can be countered by holding onto one's Bitcoin in the hopes it increases in value.
Step 5 – Partner with a reputable hosting provider
Bitcoin Mining Is Still Profitable!
It's not always guaranteed, but it is 100% possible. If you pay careful attention to your mining rig and the variables that play into your profits, there is always room to earn
The blockchain needs dedicated miners to validate transactions and will reward them for doing so. Play your cards rights, and you'll always make money with Bitcoin mining.