Mining Bitcoin, Profitability Analysis

[The following is not investment advice.]

This is a demonstration of how to estimate your returns from mining Bitcoin.

The process of mining involves purchasing, installing, selling, packing, shipping, configuring, repairing and monitoring computer server hardware. ASIC hardware requires constant ventilation with LOTS of power in a dust-free space where you can make an unlimited amount of high-pitched whining mechanical noise 24/7. And that’s just the hardware.

The costs outlined below assume that your labour and infrastructure at home are both qualified and free. Only the hardware and electricity bill are included in the analysis. Shipping and taxes have been omitted. All prices in USD.

Let’s see what it takes to mine one bitcoin over 12 months, as a resident of California.

In order to estimate my bitcoin mined over time while compensating for the increasing mining difficulty, I will use this calculator.

According to CryptoBuddy, I will need 2 Antminer S9’s to mine one Bitcoin in a year. Total cost with power supplies (price from CloudSigma): $5,320

The residential rate for electricity in California is $0.15/kWh
Two Antminer S9’s use approximately 25,404 kWh per year = $3,810

I can expect to sell my Antminers for about half what I paid = ($2,660)

By November 2018 I have sold my miners, spent a total of $6,470 and retired from the mining life with 1.16 Bitcoin to show for it, valued today at $9,280.

Hosting two Antminer S9’s at ColdMine for one year is targeted to cost $2,930 which is $880 cheaper than the power bill in CA. Total cost to buy and host two Antminer S9’s for a year at ColdMine (post resale): $5,590

Unless you are already used to running server hardware in your house, you are going to find these things surprisingly offensive. As a system administrator myself I wouldn’t run ASIC miners at home unless I was somehow harnessing the heat in the HVAC system. (That is a great way to recover value if you can put the heat to work.)

Anyone who isn’t building out electrical infrastructure or heating their home with ASIC hardware should upgrade to a colocation host. Your miner will be professionally cleaned, installed, maintained, monitored and, when you’re ready, sold on and/or upgraded. It will run more efficiently in the dust-free, clean and redundant power environment of an ASIC mining centre.

– Neil

Bitcoin profitability calculated using Crypto Buddy