How is bitcoin mining profitability calculated?

Bitcoin mining profitability is calculated by estimating what a machine should earn per day and subtracting what it costs to run, the logic every bitcoin mining calculator follows. The revenue side depends on hashrate, network difficulty, the block reward and the bitcoin price, while the cost side is mostly electricity. Every input moves, so any result is a snapshot.

How does mining difficulty affect bitcoin mining profitability?

A miner's expected share of new blocks depends on its speed compared with everyone else. The Bitcoin Wiki gives the core formula: the average time for one machine to find a block equals the difficulty multiplied by 2 to the power of 32, divided by the machine's hashes per second.

For a single ASIC that time runs to many years, so in practice miners join a mining pool and are paid a share that matches their contribution. Difficulty resets every 2,016 blocks. When more machines join, difficulty rises and the same machine earns less bitcoin, a dynamic described in how bitcoin mining works.

What is hashprice?

Hashprice is the expected revenue per unit of hashrate per day. Hashrate Index, a data service run by the mining firm Luxor, says it is driven by four inputs: the block subsidy, which has been 3.125 bitcoin since the 2024 halving, the difficulty, transaction fees and, for a dollar figure, the bitcoin price. It notes hashprice can swing 20 to 30% within one difficulty period.

Multiplying a machine's hashrate by the current hashprice gives a rough daily revenue figure. Luxor's version of the profit formula is hashrate times hashprice, minus power consumption times power price.

How do you calculate electricity cost for bitcoin mining?

Daily electricity cost equals the machine's power draw in kilowatts, times 24 hours, times the price per kilowatt-hour. Hashrate Index lists Bitmain's air-cooled Antminer S21 at 200 terahashes per second and about 3,500 watts. Running it all day would use 3.5 times 24, or 84 kilowatt-hours.

As a made-up illustration, at an electricity price of 8 cents per kilowatt-hour that machine would cost about $6.72 a day to power. Hashrate Index says electricity makes up 60 to 80% of operating costs, which is why efficiency, measured in joules per terahash, matters so much. The S21 was listed at 17.5 joules per terahash. Cooling and facility power add to the total.

What else goes into a bitcoin mining machine's profit per day?

Several smaller items change the result:

• Pool fees. Pools pay in different ways. Full pay per share pays the expected value of the subsidy and fees and, according to Hashrate Index, usually carries a slightly higher fee. Pay per last N shares pays only when the pool actually finds blocks and can have very low fees.
• Hardware cost. The purchase price of the machine is spread over its useful life, which shortens as newer, more efficient models raise difficulty. See what is an ASIC miner.
• Uptime, taxes and hosting. Hours offline earn nothing, and the rest varies by location.

A calculator result holds only while difficulty, fees, price and power cost stay the same.