Will Bitcoin mining be profitable in 2017?
Before, they called Bitcoin mining extremely profitable. However, times change and we may discover a new statistic this year. The creation of Satoshi Nakamoto was simply incredible. It created a great number of possibilities for people who were not scared to try a new method of payment – cryptocurrency. No one could believe that Bitcoin will become so popular and will be used by big companies that have a decent reputation in the whole world.
To mine and get profit, you must have a special equipment. To buy a good piece of hardware, you need to spend quite a lot of money, otherwise, you profit will be very low or you will go in minus. If you are not going to spend enough money on a high-quality hardware, you will constantly lose money on electricity.
Common terms for mining
At first, when you enter the Bitcoin system, you may feel a little bit lost. There are quite a lot of special terms that mean certain things. Here we are going to provide you some terms and give their explanation:
A group of payments made in bitcoins that was collected from pending transactions and added to a constantly growing record of blocks. A new block gets created every 10 minutes.
Proof of work Hashing
This is the function that are done by mine-workers for defining a new block. PoW hashing ensures the right function of Bitcoin blockchain. Mine-workers compete to solve a cryptographic puzzle that is well-known as the hash. This process does not have shortcuts that can be solved only with the help of the computational power. Mine-workers prove their investments in work and get the reward by the certain number of created bitcoins only if the do the hashing correctly.
At first, the reward for a block was 50, then 25, and now the number equals 12,5. The halving happens every 4 years. This will happen until there will be 21 million of bitcoins created. This is the only one way to create new bitcoins.
This is the measure of the computational power of a mine-worker. The higher its power, the more solutions they will find. The hash rate is measured in seconds – H/s. After the measurements happen this way:
Kilohash = KH/s (thousands of H/s), then
Megahash = MH/s (millions of H/s), then
Gigahash = GH/s (billions of H/s), then
Terahash = TH/s (trillions of H/s), and even
Petahash = PH/s (quadrillions of H/s)
This common term means what does not allow a mine-worker to find a block every 10 minutes. When a general hash rate grows. The difficulty adjusts upwards. The difficulty adjusts automatically every 14 days
BTC or XBT exchange rate
This is the current price or bitcoin.
The term means Watts per hash rate per second. Electricity is one of the main costs of Bitcoin mining. The price is paid per Watt and has a big impact of income.
You have to join other mine-workers in a mining pool where chances to solve a block become higher. Every time when a block is solved, all mine-workers get the reward in relation with the contributed hash rate.
Mining income calculating
Once you know all the above-mentioned terms connected to Bitcoin, you can calculate the profit that you can possibly get. However, keep in mind that the future income from mining cannot be predicted accurately. The inability to see 100% correct numbers relates to changing of difficulty modifier and the price of bitcoin.
So to calculate your possible income, you should choose ASIC mining rig that suits you. To compare available hardware for mining, visit Bitcoin Wiki and review the comparison of all equipment for mining. For example, we can review AntMiner model S7 that is considered a decent one for mining and getting a good income. You can get this piece of hardware at the price $450 to $600 depending on where you are going to purchase it from. Additionally, you will have to buy a power supply that will cost you + $150.
Then you will have to enter the AntMiner model S7’s cost and other information such as the cost of electricity and payment for a mining pool into a number-cruncher. Use CainWarz.com online calculator to define you possible profit. It will automatically fill the current bitcoin price, as well as difficulty and reward details.
For example, in China, the cost of electricity that you are going to use is 10 c in USD currency, maybe it will be a little bit higher at other places. Check the prices for electricity all over the world or your utility bills for the precise price to find out your expenses on electricity. 2.5% is a fee for AntPool. Usually, the small mining pools the fees are not very high, however, to use them is not very smart because it cannot promise you to find a block for sure.
So, let’s come back to a calculator. Once all information is registered, click calculate and see your possible income result. If you use the above-mentioned details, you can get around $800 in a year if you use AntMiner model S7. It is quite an impressive number.
Prediction for Americans
Taking into account that the difficulty and the price stay the same, it seems like every year an American mine-worker can make only $500. If they put up the difficulty level in the income calculator for 30%, the income will disappear completely. It means that $500 will not exist anymore.
Unexpected income loss, spikes in difficulty, prices, hardware, cuts of power, delivery delays, etc. Such scenario for Americans seems very risky when it comes to mining bitcoins. There is a possibility of some big mine-workers will be hurt from such big jump of difficulty. If home mine-workers do not have a free access or a very cheap electricity, they do not have any chances to compete in such complicated conditions.
Prediction for Chinese
Of course, Chinese mine-workers provide much more power to mine bitcoins. In this country, the income will definitely be higher just because the price for electricity is really low comparing to America.
Some parts of China have too much power. This way, the low cost of electricity gets reached. Therefore, for such mine-worker as AntMiner model S7, it is perfect. To mine here, there are a lot of mining hardware that will be sold cheaper for local customers.
Before the spike in difficulty happened, even a small mine-worker in China with AntMiner S7 connected to AntPool can earn about $1000 every year. This is two times more what Americans can do.
Some remote provinces have low expenses for power, therefore, there are going to be large mining operations in those areas. One of the most popular options is hydroelectric power from dams. This way, the cost for power will be around 5c. Such operations will buy mining hardware. They may buy AnyMiner S7 at the price $325 and this is only a half of the full price.
Before the operation would make $1.4 in a year. Taking into consideration the investments in hardware that equaled $325 thousand of USD the income that comes to $200 thousand USD cannot make us feel happy. It is obvious that some mining operations will have to leave this business. The one good thing is the price of bitcoin. It will allow less effective mine-workers to carry on for longer.
If you have a home mine-worker you will have to work hard to establish a good price of mining equipment and electricity. After the innovations in the ASIC intellectual hardware area, the points of diminishing returns are reached. Hopefully, less expensive power solutions will be more stable for Bitcoin mining.
At the moment, the most popular mine-workers are AntMiner model S7, S9 and Avalon 6. While AntMiner S7 and Avalon 6 come at the same price $500, AntMiner S9 costs almost $2000. The capacity of S9 is 13,5 while its competitors’ does not reach 5 Th/s. The power effectiveness of S9 is 0,098 W/Gh plus it has the lowest weight.