How Much Can I Earn from Bitcoin Mining?

• Blockchain Council
• September 07, 2024

Bitcoin mining has gained a lot of attention in the cryptocurrency space. If you’re new to this and wondering how much you can earn from Bitcoin mining, read till the end.

Understanding the Costs Involved

Before understanding how much you can earn from Bitcoin mining, it’s crucial to understand the costs involved in Bitcoin mining. The primary costs include:

• Hardware Costs: Bitcoin mining needs specialized hardware called ASICs (Application-Specific Integrated Circuits). In 2024, the cost of one ASIC can vary from $2,000 to $20,000.
• Electricity Costs: Mining Bitcoin is energy-intensive. The amount of electricity your mining rig consumes significantly affects your profitability. In the U.S., electricity prices vary widely by state, ranging from as low as $0.09 per kWh in states like Texas to as high as $0.30 per kWh in states like California. 
• Cooling Costs: Mining rigs generate a lot of heat, which necessitates an investment in cooling systems to prevent overheating. This adds to both the initial setup and ongoing operational costs.
• Mining Pool Fees: Many solo miners team up with a mining pool to boost their chances of earning Bitcoin. Pool fees usually take between 1% to 3% of your earnings.
• Taxes: In the U.S., earnings from Bitcoin mining are considered taxable income. You should keep track of your earnings and save a portion for taxes based on your tax bracket.

How Much Can I Earn from Bitcoin Mining?

Bitcoin mining has grown more competitive, particularly after the recent halving event, which cut the block reward from 6.25 BTC to 3.125 BTC. So to answer how much you can earn from Bitcoin mining, let’s take a simple example. We will consider that you are going for solo mining and not pool mining:

Initial Investment:

• Hardware:
  • We’ll use the Bitmain Antminer S21 Hyd for this example. It is a powerful and efficient mining rig with a hash rate of 335 TH/s. The current price is around $4,000.
• Setup Costs (Cables, Software, etc.):
  • You should budget approximately $500 for cables, software, and any additional setup costs.
• Total Initial Cost:
  • $4,581 ($4,081 for the hardware + $500 for setup costs).

Monthly Operating Costs:

• Electricity:
  • The Antminer S21 Hyd consumes about 5,360 watts.
  • Electricity cost in the U.S.: Assuming an average electricity cost of $0.12 per kWh (which is typical for many states), the monthly electricity cost can be calculated as:
    • 5,360 watts x 24 hours/day x 30 days/month = 3,859.2 kWh/month
    • Monthly Electricity Cost: 3,859.2 kWh x $0.12 = $463.10
• Cooling:
  • Cooling costs can vary, but let’s estimate around $50 per month for a basic cooling setup.
• Total Monthly Operating Cost:
  • $513.10 ($463.10 for electricity + $50 for cooling).

Monthly Earnings:

• Bitcoin Earnings:
  • The April 2024 halving reduced the block reward to 3.125 BTC. With a hash rate of 335 TH/s and considering the current mining difficulty, the Antminer S21 now produces approximately 0.000675 BTC per day. This translates to:
    • Daily Earnings: 0.000675 BTC/day x $64,000/BTC (Price of BTC as of August 26, 2024) = $43.20 
    • Monthly Earnings: $43.20/day x 30 days = $1,296.00

Profit:

• Monthly Profit = Earnings – Operating Costs:
  • $1,296.00 – $513.10 = $782.90
• Time to Break Even:
  • Initial Cost / Monthly Profit ≈ $4,500 / $782.90 ≈ 6 months

Given the data, it would take approximately 6 months to break even on your initial investment if the Bitcoin price remains stable and other factors like electricity costs do not fluctuate significantly. This means that your initial investment of $4,581 could be recouped in about 6 months. After this period, the ongoing monthly profits would directly contribute to your earnings. 

However, your earning potential highly depends on how good you are at navigating the volatility of crypto market. To be a pro at it, consider enrolling into investor recommended certification programs, such as the Certified Bitcoin Expert™ and Certified Cryptocurrency Trader™ (CCT).

Other Ways to Mine Bitcoin

If you join a mining pool, you will have more chances to earn BTC rewards. Joining a mining pool lets you merge your computing power with others. More the hash, more the chances. However, you must pay a portion of your earnings to other miners. This percentage will be pre-decided while joining a Bitcoin mining pool. 

If investing in expensive hardware is not feasible, cloud mining offers another alternative. Here, you rent mining power from data centers. However, you will share your profits with the service provider, and there are risks involved, such as reliability issues with the provider.

Is Bitcoin Mining Worth It?

Bitcoin mining can bring profits, but it needs a large initial investment along with ongoing expenses. It’s also a highly competitive field, with large mining farms often having an advantage due to lower operational costs and access to the latest technology. For most beginners, the potential for profit depends heavily on access to cheap electricity and the ability to manage and maintain mining equipment efficiently​.

Conclusion

Mining Bitcoin in 2024 can still be profitable, but it is far from easy. You need to consider the costs of hardware, electricity, and cooling, as well as the volatility of Bitcoin’s price. While the potential for earnings exists, it comes with substantial risks and upfront costs. For those who are serious about entering the mining space, careful planning and consideration of all expenses are crucial to success.