Are you interested in mining cryptocurrencies? You could simply buy Bitcoin and start trading top to start profiting, but in case you are truly interested in mining because you want to invest in cryptocurrencies for the long term, then this guide will help you.
Nonetheless, be warned that cryptocurrency mining can be more complex and challenging than you think. It requires a substantial investment and to keep the operation running for a long time in order to make it profitable.
The Price of the Cryptocurrency Will Determine Your Profit
As simple as that. Let’s suppose that you start mining Litecoin. As long as the price of LTC stays high, then your returns will be high as well. The further it grows, the more you will earn. The same applies to BTC, ETH, and any other cryptocurrency that you can mine.
However, things go sour when the prices of the cryptocurrencies start to tank and dip, as in every bear market. For example, even the most important cryptocurrency mining companies had to reinvent themselves to survive the previous bear market cycle, according to Bitcoin.com. And this is going to happen again.
For example, you can check how Bitmain managed to survive the bear market of cryptocurrencies. And the same goes for Genesis Mining and Bitfury.
No market is bullish forever, regardless of how much positive news and events happen. There will be a major crash as in every cycle, and if you are up to mining cryptocurrencies, then you need to be ready for it. You need to make sure that you will be able to stand such a big hit, because if you have to stop your operation, then you won’t be pulling out any profit, because you have to cover the investment of your machines, electricity, software, etc.
With that in mind, let’s see how to calculate the profit from mining.
The Bitcoin Example
Let’s suppose that you buy the Antminer S9 that comes with a rate of 13.5 TH/s. It’s one of the best out there for mining Bitcoin. Each one will cost you approximately $2400 USD. You are going to set up your rig and you decide to buy 5 Antminer S9s – that’s approx. $12,000 USD.
Based on the TH/s, it’s possible to calculate your hashrate, which will determine how much bitcoin your rig will produce. We will put this in daily terms.
The current hashrate (March 15th, 2021) is 154.59 million TH/s. Now let’s simply use this formula.
Your hashrate share = machine hashrate / total network hasrate
Replacing it, it would look like this:
Your hashrate share = 13.5 TH/s / 154,590,00 TH/s
That’d put your hashrate at 0.0000000873277702% – let’s make it 0.000000087% per machine.
Now, you have 5 miners, so that’d be 0.000000435%.
Nowadays, the block reward stands at 6.25 bitcoins. That takes us to 9.25 BTC per block. And according to the calculations, we have 900 new BTC mined every day. Since your hashrate share is 0.000000435%, then you would receive a total of 0.0003915 BTC, which at the current price of $57,000, would make $22 USD approximately.
Of course, this is without taking the electricity costs into account. For a more precise calculation, we invite you to check out this calculator by CryptoCompare.com.
The calculations will vary depending on the network hashrate. However, this is enough to show you that you require several miners in order to make a substantial profit daily/weekly/monthly.
Now, let’s imagine that you keep mining during the bear market with the same rig of 5 miners. That’d take your daily profit of $22 USD down to $4-5 USD if we were to suffer a major crash of 80% like in previous cycles.
Therefore, ask yourself if you are in a real position to start mining cryptocurrencies. Because it’s a number of games, and unless you have a good capital to invest in several mining machines and you have enough resources to keep running the operation, you’re better off just buying BTC and other cryptocurrencies.
As you can see, cryptocurrency mining is more complex than it seems. Our recommendation is to indulge in it if you have a large fund for investing. Furthermore, look for more profitable cryptocurrencies such as ETH, which can greatly increase your earnings.
Also, you can try trading your cryptocurrencies, to increase even more your profits. Finally, be ready for the next bear market cycle, because it will arrive eventually, and you better be ready for it to protect your investment.