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Is Bitcoin Mining Profitable in 2018?


Oct 26, 2017 Posted /  9833 Views


Is Bitcoin Mining Profitable in 2018?

Hardware Comparison - Bitcoin Mining

At present, depending on

(1)   Price per hash and

(2)   Electrical efficiency

During its early days, Bitcoin mining was generally called as a gold rush. An invention of Satoshi Nakamoto's, Bitcoin - a peer-to-peer electronic cash system disclosed entirely new perimeter, not in the form of freedom but in profit as well. People who are taking a strong interest in such things were the leading to stake their claim that is cypherpunks, cryptographers, technically-minded libertarians and assorted hackers.

But Is There Still Gold In Them Thar Hills?

From a little of early enthusiasts, it is believed that the mining of Bitcoin has made a great advancement into a cottage industry to a specialized industrial-level venture. The money available at low interest was taken out in the distant past and the remaining are secreted - under the cryptographic equivalent of hard rock miles.

In order to profitably excavate bitcoins these days, there is a need for specialized high-powered machinery. Where it is possible for everyone to mine technically, people with underpowered setups are likely to spend more money on electricity, instead of money generated through mining.

Common Mining Terms

In order to advance Bitcoin mining, it is essential to understand these few basic technical terms:

Block - Bitcoin transactions group, composed of current pending transactions and move into an ever-evolving record of blocks (aka “the blockchain”) by a miner. On an average of every ten minutes, a new block is created.

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Proof of Work Hashing: In order to define a new block, it performs as a function miners. PoW hashing make sure the appropriate function of the Bitcoin blockchain. Miners participate to crack a cryptographic “puzzle,” known as a hash. Well, the process doesn’t involve any shortcut, therefore, it can only be solved with raw computational power. Hashing the current block appropriately, miners verify their work investment and are further rewarded with a definite number of newly-created bitcoins.

Block Reward: The total number of newly-created bitcoins. Initially, this number was set to 50, cut up to 25 in late-2012 and will halve again to 12.5 in mid-2016. The process of halving process continues, approximately after every four years (or every 210,000 blocks), until/unless the complete 21 million bitcoins are generated. New bitcoins can be created in this way via miners, according to the code’s rate and limit.

Hashrate: A miner’s computational power analysis. The greater will be their relative power, the higher solutions (and hence, block rewards) they're probably discovered. Due to the increasing speed of mining hardware, they were initially measured in hash per second (H/s). Soon, H/s was commonly pre-fixed with SI units as follows:

  • 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).

Hashrate Difficulty: Over the years, difficulty with hashrate shooting up. It seems that blocks are likely to be founded by miners more rapidly. The difficulty measure of bitcoin is what helps in avoiding this from happening by confirming blocks are originated after every 10 minutes. With the rise of total hashrate, the difficulty of POW hashing adjusts upwards, simultaneously the reverse also applies. Difficulty auto-adjusts every two weeks (or 2016 blocks).

BTC / XBT Exchange Rate: Bitcoin's current fiat price - precarious for calculating profitability.

W/xHash/s: Watts per hashrate per second. Bitcoin mining major on-going cost is Electricity. The price paid per Watt will greatly impact profitability.

Mining Pool: The odds of solving a block by yourself (i.e. “solo-mining”) are extremely low unless you command a tremendous hashrate. Banding together with other miners in a so-called pool, you incorporate odds of resolving a block rise comparative to the pool’s total hashrate. Pools are likely to reward individual miners, whenever they solve blocks - according to their contributed hashrate (minus commissions and the like).

Calculating Mining Profitability

By keeping these terms in mind, it’s worthwhile to measure the profitability of Bitcoin mining in 2018 for your circumstances. Be careful! The future success of mining cannot be reliably predicted. The reason behind is the ever-changing nature of the difficulty modifier and varying BTC price, in particular.

In order to initiate, you need to choose a suitable ASIC mining rig. To ideally select, the Bitcoin Wiki offers a handy mining for hardware comparison: Let's suppose an example by selecting the AntMiner S7 which seems to be the cutting edge of mining tech, also a modern mining rig, offering a good hashrate for its power consumption. The cost is S7 in Amazon is available for $609 and only $450 from BitMain, excluding shipping. $150 or so is additional for the power supply units.

Further, entering the S7’s specs and cost, as well as other info, including power cost and pool fees, into an appropriate number-cruncher. CoinWarz provides a good mining lucrative calculator that automatically occupy the current BTC price - difficulty and block reward info.

However, there are certain scenarios: American and Chinese that can help you get a better understanding. Whereas, the results they provide are discussed below.

Results

Before the halving and Difficulty spike, the annually operation net worth would be $1.4m.

After the halving and Difficulty spike, the operation would profit annually by about $200k.

It doesn’t look great a profit of $200k and shown the initial hardware investment of $325k.

It is predicted that marginal mining processes are forced out of business post-halving, specifying the other costs included in mining, included property, salaries, maintenance, etc. however, those with latest and greatest hardware, incorporating the cheapest electricity - are likely to pull through. Bitcoin price is the only wild card, enabling less efficient miners to keep the lights on for longer if it rises sufficiently.

The Bottom Line

It seems to be a tussle to recoup the cost of mining hardware and electricity for an average home miner. In this present scenario, productivity is highly unlikely. Once there is a reach of innovative ASIC mining hardware, the point of diminishing returns, resulting in improving the future situation. Together with low-priced, hopefully, sustainable power solutions probably once again turn Bitcoin mining profitable to small individual miners situated all around. The Bitcoin network decentralization is likely to improve hardening greatly against legislative risk.


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Tags: bitcoin Mining 2018 Bitcoin Mining New bitcoins can be created current BTC price

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