How does Bitcoin (BTC) Mining Calculator Works?
This Bitcoin mining calculator will help you predict the amount of profit that you will be making based on the various factors that influence the mining operation. It works on a simple principle. Takes the input value of your mining hardware feeds it into the Bitcoin Mining Algorithm does the calculation and predicts the profit/revenue or you can no of bitcoin generated and profitability of the same
Here’s a look at how our mining calculator works:
Basically, you first need to consider the Hash Rate of your miner - the higher the hash rate, the faster it can mine for Bitcoins. Hash Rate is usually measured in GH/s (GigaHashes per Second).
Next, you need to enter the amount of power (in terms of Watts) that your mining device consumes.
After that, the price of the power is considered - the price at which you get electricity. The lower the price of electricity, the more profitable your Bitcoin mining operation is.
Pool fees percentage is also considered in this - most Bitcoin mining pools charge a small fee. After deducting that percentage of the fees, you can get a better, clearer picture of the profitability of your mining.
Mining difficulty is also considered as a factor. Ever since the Bitcoin network went live, mining difficulty has been constantly increasing - the higher the difficulty, the harder it is for miners to mine for Bitcoin.
Another crucial factor here is the block reward - basically, the number of Bitcoins released upon solving a block: this number keeps reducing by 50% every four years. The current block reward is 12.5 BTC per block, which will reduce to 6.25 BTC per block in May 2020.
Finally, the Bitcoin price is also taken into account: which has a major impact on Bitcoin mining profits. The higher the price of BTC, the more profitable your mining operation is. Also, you can see the Bitcoin Price Prediction calculate.
When you enter all these factors into the Bitcoin mining calculator, the profitability of the mining operation is determined. The mining calculator shows you your profits on an hourly, daily, weekly, monthly and yearly basis.
The Need for a Bitcoin Mining Calculator
Mining is much more than just something that you do to gain Bitcoins. It is a proper investment and it requires a detailed thought process behind it. No investment is usually made without keeping the profitability in mind - and Bitcoin Mining Calculators help you determine the profitability of your mining operations.
Considering that in the world of cryptocurrency, everything is so dynamic - one always needs to keep a track of their progress - and how profitable their mining operations continue to be. Sometimes, these ‘dynamic changes’ can be internal - such as an increasing mining difficulty or a drop in the block reward. However, there can be some external changes too - such as the cost of electricity or a change in the pool fees percentage.
Keeping all these factors in mind is essential and any change in any of these factors would change the profitability of your mining operations. The most important factor, however, continues to be the price of Bitcoin. The higher the price of Bitcoin goes, the more profitable a mining operation becomes and the lower it falls, the profits fall along with it.
Hence, a Bitcoin Mining Calculator helps you check at all the times about how profitable your operation is, keeping all the other factors in consideration. You can pause or resume your mining operations on the basis of the profitability - to ensure that you are not making any losses while mining.
Bitcoin’s Price Volatility
The biggest factor that determines your Bitcoin mining operation is the price of Bitcoin itself. Anyone who invests in Bitcoins must know about the price volatility. Bitcoin, which went from $950 to $19,500 in 2017 - has been on a major downtrend in 2018. However, the potential to bounce back is immense.
The price of Bitcoin can be the make-or-break factor for all mining operations. When the price rises, mining operations can provide extremely high returns. However, when the price declines, the profitability of the Bitcoin mining operation to goes down.
To understand Bitcoin’s price volatility, one has to understand some basic economic concepts: that of demand and supply. When the demand for Bitcoin rises, people begin to buy it in large numbers - and the more Bitcoin is purchased, the higher the price rises. This is because there are only a limited number of Bitcoins in circulation - the lesser Bitcoins remain in circulation, the higher the price would be. However, when people begin to sell their Bitcoins - and the Bitcoins in circulation rise, the price of the currency falls because of abundance. The lesser the supply the greater the price of the currency.
Moreover, there are a number of other reasons which can result in Bitcoin’s price fluctuations. Sometimes, government actions such as China banning cryptocurrency exchanges or Korea launching a probe in crypto exchanges in the nation result in price crashes. Other times, it might be an external malicious force such as a group of hackers who break into an exchange, stealing cryptocurrencies. These kinds of events lead to a fall in the price.
Every time there’s a major fluctuation in the Bitcoin prices, miners need to check the impact of the change of prices on their profitability using a Bitcoin Mining Calculator. Our Bitcoin mining calculator automatically grabs the latest Bitcoin price to ensure that you are shown the latest results based on the current price of Bitcoin.
How can the Bitcoin (BTC) mining profitability be calculated? - Factors That Influence Your Bitcoin Mining Profits
There are a number of factors that influence your Bitcoin mining profitability: while the most basic factor, as we have discussed above in detail - is the price of the Bitcoin itself, there are also a number of other factors that need to be considered before you begin your mining operations. Let us take a look at three main factors which affect mining profitability.
Investment into the mining setup: One factor that many people tend to miss out is the investment that they make on the mining setup. Bitcoin mining is not a cheap affair and it often requires thousands of dollars to set up a proper mining rig with multiple ASIC miners. It often takes miners months or even years to break even on that initial investment that they put in, after which it is all profit. A Bitcoin mining calculator can be used to check the amount of time it would take you to break even given that conditions remain static.
Cost of Power: Bitcoin mining operations tend to consume a large amount of electricity. Hence, the cost of power has a major role to play here - the higher the cost of the power, the higher would the cost of the mining operation be. This is the reason a number of Bitcoin mining operators are choosing locations with cheap power for their mining operations.
Block Rewards: Considering that block rewards reduce by 50% every four years - your profits would significantly reduce when this happens in 2020. However, the logic behind this is that with every drop, the price of Bitcoins too would increase as they would become an even more scarce resource - hence neutralizing the reduction in quantity.
Conclusion: Before setting mining farm it is advisable to use Bitcoin Mining Calculators to calculate the profitability of the same.
Bitcoin mining calculators are not just a one-time tool - they are a constant support that Bitcoin miners need. With any change to any of the factors - the price of Bitcoin, the price of electricity, or the difficulty/rewards, miners need to know the impact it will have on their mining process. Our Bitcoin mining calculator shows an exact breakdown of how each price influences the profits.