Is Bitcoin Mining Profitable in 2024?
Key Takeaways
- The ultimate goal of most Bitcoin miners is to make a profit – but there are lots of variables to consider.
- The difficulty of mining each new Bitcoin is increasing all the time, as technology advances and more miners enter the race.
- Hardware costs, tax regime and power costs will all impact your bottom line.
- Some countries and areas offer more favourable conditions for miners looking to make a profit, and knowing the ecosystem helps you make better decisions.
Bitcoin mining used to be one of the best ways to make money with cryptocurrency without investing. Just set your computers up with the necessary software, provide an electricity source and “hey presto!” you’re making a stream of passive income.
But those days are long gone, and now we see massive warehouses, filled with ASICs or GPUs, mining for Bitcoin or other cryptocurrency, with industrial grade coolers and subsidized electricity costs. Like most things in the world, Bitcoin mining has become a corporate venture.
But there are still people willing to get started in the field. The main question we will try to answer here today, is it worth to start Bitcoin mining in 2024? Will it be profitable? Or better yet, how can you make it profitable?
Is Bitcoin Mining Profitable in 2024?
The easy answer is that Bitcoin mining can be profitable, but it depends on your setup, location and scale.
As a solo miner with minimal equipment, mining Bitcoin is unlikely to make you a profit – in fact, it will more likely cost you money for the power you’re supplying. But with pool mining and decent equipment you can still see some profit, even after maintenance costs.
Let’s dive deeper into what costs you will have to cover when you start mining Bitcoin.
Costs of Bitcoin Mining
There are 3 major costs you will encounter when you start Bitcoin mining:
- Hardware costs
- Electricity costs
- Maintenance/tax costs
Hardware Costs
Mining hardware will most likely be your largest expense. It depends on the quality of hardware you decide to go for. The more powerful the hardware, the larger the cost. Here are some ranges you’ll be looking at when choosing the best bitcoin mining rigs available in 2024
- Budget Hardware – $200-$300
- Mid-range Hardware – $1000-$2000
- High-end Hardware – $2000+
Naturally, the stronger the mining hardware, the larger your reward, all it takes is to calculate their profitability based on your unique situation.
Electricity Costs
Next up will be your electricity costs, because the mining hardware takes quite a lot of it. Like really, a lot.
To give you an example, here’s how much electricity the Antminers we mentioned earlier consume:
- Antminer S9 – 1,372 watts per hour (1.372 kWh)
- Antminer S19 – 3.250 watts per hour (3.25 kWh)
- Antminer S19 XP Hydro – 5,430 watts per hour (5.43 kWh)
To help you understand the scope of electricity consumption, a standard refrigerator consumes around 400-600 watts per hour. So basically, if you choose to go for the higher-end mining rig, it will be like maintaining 11 refrigerators in your house.
The average cost of electricity in the US, according to the Bureau of Labor Statistics is $0.17 per kilowatt-hour.
So, for example if you have just 1 Antminer S9 that you use for 24 hours, that’s 33 kilowatts and $5.61 per day. Now consider that most people have multiple of these mining rigs active year-round, and you can imagine just how much the price compounds.
And that’s for the cheapest mining rig out of the ones we’ve mentioned.
Maintenance/Tax Costs of Mining Bitcoin
Maintenance costs contain quite a diverse array of things that can go wrong, that you will need to fix. Let’s talk about the ones you’re most likely to encounter.
- Cooling costs – Mining hardware produces a lot of heat and can get damaged if overheated. Therefore, setting up a cooling system through fans is pretty much a necessity, that’s additional electricity and hardware costs.
eg. An industrial fan costs around $3000-$5000 and consumes around 400 watts per hour (0.4 kWh). According to our previous calculations, that’s an extra $1.6 per day for electricity. But if you go with a smaller cooling system, it will be much less.
- Repairing & Replacing parts – If you’ve had to deal with any hardware in the past, you’ll know that something always breaks somewhere. On average, you can consider that you’ll have to replace at least 1 part per year, which can be hundreds of dollars, depending on the part.
- Taxes – Let’s say you’re resident in the US and are actively mining Bitcoin. Any time you mine some Bitcoin, or receive profits from a mining operation you’re part of, you become eligible to pay tax. Normally, you’ll pay income tax, because in the eyes of the state, you’ve just made money. However, if you decide to wait and sell that Bitcoin at a higher price than you mined it at, then you have to pay capital gains tax as well.
The type of tax you’re liable for – and how much – depends on your personal circumstances. But it’s worth bearing in mind that tax costs need to be factored into your profit calculations.
Factors Affecting Bitcoin Mining Profitability
There are 3 major factors that can affect Bitcoin mining profitability, and those are:
- Costs
- Mining Difficulty
- Bitcoin Price
Since we’ve already talked about the costs associated with Bitcoin mining, let’s take a look at the 2 other factors.
Mining Difficulty
Mining difficulty is determined by the rate at which new blocks are produced on the blockchain. The current target to create a block is 10 minutes regardless of the computational power of miners taking part in the process.
The difficulty rate is re-adjusted every 2,016 blocks. So, if we do the math, that means that every 2 weeks we get an adjustment (because 20,160 minutes is 336 hours, which is 14 days).
If it is discovered that mining 1 block took less than 10 minutes the difficulty increases to keep it competitive. Therefore, every time a new miner joins the network, or upgrades their hardware to increase hashrate, the mining difficulty increases, requiring even more hashrate (currently BTC hashrate is at 794.45 EH/s, which is around 394,000,000 TH/s).
If it were the other way around where the overall hash rate decreased, then it would decrease the difficulty requiring less hash rate for existing miners.
Therefore, we are left with the idea that, the harder it is to mine 1 block, the more you have to spend on better equipment (to increase your hashrate) to get a sizable share of the reward.
Bitcoin Price
Now that we’ve established how mining difficulty affects profitability, let’s move on to the final product, the thing we’re all trying to get as a reward of our efforts from buying and setting up all of these mining rigs, Bitcoin itself.
Right now, the reward for mining 1 block is 3.125 BTC, after the last halving in April 2024. Every 4 years, the reward is halved, in order to combat inflation. Therefore, in 2028, the reward will be 1.5625 BTC. Naturally, the higher the price & the reward, the higher the profitability.
Let’s Calculate Bitcoin Mining Profitability With Our Data
Now that we have set everything up, let’s calculate the profits based on BTC price in 2024 November. Let’s create a scenario:
- Our Hardware – Antminer S19 ($1,200)
- Our Electricity– $0.17 per kWh
- Our Taxes – 24%
Now that we’ve set up our costs and hardware let’s see what we can produce with what we have.
- Our Hashrate – 90 Th/s
- Our Uptime (time where our hardware is working) – 50% meaning on average we are working 5 minutes out of the 10 required to mine 1 block.
- Our Output – 90(Th/s) x 300(seconds in 5 minutes) = 27,000 Th
- Hashes Required to Mine 1 Block – 476.68 Billion TH
- Our Share of Work – 0.000005664177225811865% of Hashes
- Our Reward per Block (BTC = $72,000) – $0.004
- Our Reward per Day – $0.293
- Our Reward per Month – $8.8
Ok, we have $8.8 revenue from our 1 single mining rig, let’s now calculate our costs, shall we?
- Electricity Costs – (3.25(kWh) x 360 (our uptime in hours)) x $0.17(cost per kWh) = $198.9
- Taxes – $8.8 x 0.24 = $2.112
So, in the end we are left with $192.2 in losses per month. But as you can see from all the calculations we have been doing, there are ways we can increase our profitability by reducing costs. Let’s dive into those methods next.
How to Make Bitcoin Mining More Profitable?
Based on what we’ve talked about already, it’s pretty clear that the only ways we can increase our profitability is to:
- Increase our hash rate
- Decrease our electricity costs
- Decrease our taxes
Let’s talk about them in detail.
Increasing Hash Rate – Upgrading Mining Hardware
In order to increase our hash rate, we need to acquire better hardware. However, it’s not only about higher hashrate, the hardware has to consume less energy as well. This brings us to efficiency.
Therefore, we’re not looking for the mining right with the highest hash rate, but one with the highest efficiency. We have a list of the best mining rigs in 2024 you can take a look at.
Decrease Electricity Costs
In order to decrease our electricity costs, we have to either produce our own energy, or find a location where electricity costs are super low. Since very few people are willing to build up their own energy production, here’s a list of countried with the lowest electricity costs globally:
5 Counties With the Lowest Electricity Costs for BTC Mining
- Libya – $0.009/kWh
- Ethiopia – $0.010/kWh
- Angola – $0.011/kWh
- Syria – $0.016/kWh
- Bhutan – $0.019/kWh
This is based on information from GlobalPetrolPrices study done on electricity costs for businesses in March 2024.
Decrease Tax Rate
Another variable that impacts the profitablity of your mining operation is taxes. You’ll be subject to tax in whichever country your mining operation takes place, and of course every country has its own tax regime and specifics. However, speaking in broad strokes, some countries’ regimes are more favourable than others when it comes to mining.
The lowest income and capital gains taxes can be found in:
- Dubai – no income or capital gains tax
- Qatar – no income tax on individuals, but 10% corporate. No capital gains tax.
- Saudi Arabia – no income tax and no capital gains tax under certain conditions.
Although these countries are great for tax purposes, they may not be so great with electricity costs, so it’s up to you to find that optimal compromise between taxes, electricity costs and your own personal quality of life as well.
Final Thoughts – Is Bitcoin Mining Worth It?
All in all, Bitcoin mining is not as profitable as it once was, even though BTC is at its all time high. The Bitcoin network was designed to always have competition and make it harder for miners as time went on.
Unless you’re ready to invest a significant amount of money into your new Bitcoin mining venture, it may not be the best idea.
However, if you’re still keen on getting started with Bitcoin mining, then signing up on a cloud mining site is quite a forgiving first step for small-time miners.
FAQ
How much money can you earn from Bitcoin mining?
The amount of money you earn from Bitcoin mining is directly proportional to the amount you’re ready to invest. The more you invest in good hardware and setup, the more you will earn. If you join a good mining pool, then you can rely on earning around 0.5% of a Bitcoin per month.
How long does it take to mine 1 Bitcoin?
In a nutshell, mining 1 block which gives 3.125 BTC as a reward takes around 10 minutes, so technically mining 1 BTC takes around 3 minutes. But it’s not like BTC can be mined 1 by 1, it is rewarded after a block is mined. As this question is a bit more complicated to answer, for a more detailed explanation read our separate article on how long does it take to mine bitcoin.
Is it still worth it to mine Bitcoin?
For the amount that needs to be invested, and even more halvings on the horizon, most would say that no, it’s not worth starting anymore. Unless BTC seriously increases in value of course.
Can I mine Bitcoin for free?
Technically yes, by dedicating your PC’s CPU with the right software. But the amount you will be mining is so minimal that you’ll be losing more than you’re gaining with the wear and tear on your PC.
