Bitcoin Mining is Still Profitable in 2020?

The price of Bitcoin (BTC) has been on a meteoric upward trend in recent months, with the value of the leading cryptocurrency more than doubling in the past five months. Bitcoin’s hash rate has also risen by more than 25%, recently hitting an all-time high of 128 TH/s. Bitcoin network has faced the third block halving on 11 May 2020 which reduces the block reward by 1/2.

Since all these factors coincide with each other, it can be challenging to keep check of whether Bitcoin mining is still profitable in 2020.

Mining Difficulty

Since one of the main issues that miners must keep in mind is the mining difficulty adjusted that happens every 2016 blocks (approx 14 days)

In short, the difficulty of Bitcoin determines how much work miners must put into solving complex mathematical problems that allow them to add new transactions (blocks) to the blockchain.

Taking into consideration back in 2016, it took less than two weeks to identify a previous blockage. Still, the difficulty increased or decreased depending on how quickly past blocks were found in 2016. It grew when it lasted more than 13 days and fell when it was less, reducing the average detection time to 10 minutes.

While the hash rates tend to rise with time, thus increasing the overall difficulty of discovering blocks, thus making it harder for miners with comparatively older hardware to move in a time when they lose weight. To magnify this problem means lower profitability because the price of bitcoin tends to rise when the hash rate rises, which also means low returns.

Suppose you want to make a profit from investing in new mining hardware. In that case, you have to take into account the electricity costs associated with modern equipment. There are also steps that miners can take to boost their returns, such as buying newer mining equipment.

The best way to master the difficulty curve and maximize your chances of winning is to purchase the latest and most efficient mining hardware at a fair price. An ideal bitcoin miner is perfect for providing hash rates and generating one-tenth of the hash rate.

While for those turning up to investing in new hardware are also required to consider the subsequent price of shipping along with import taxes and the electricity cost to operate the more modern systems.

S30 M++, which would produce an average hash rate of 112 Tera hashes per second, which is about 1,000 times the hash rate of a typical bitcoin miner.

Bitcoin miners face the challenge of providing enough electricity to operate at a third of the hash rate at the same time, and deducting electricity and maintenance costs from their income, which can vary significantly depending on the energy costs they can access. Since electricity costs absorb a significant portion of the profits from bitcoin mining, securing a low-cost energy plan and establishing it in a lower-cost region is the fastest way to increase profitability. Miners also need to consider their acquisition costs to determine how long it takes for their investment to pay off.

This means that on average with the current generation of hardware, bitcoin miners can only earn $1,000 to $2,500 per hash rate per year.

Mining hardware purchased closer to the initial start date is often worth buying faster than equipment purchased later, so you can recoup some of your initial costs by reselling your used miners when you are buying new equipment.

However, since most bitcoin miners lose thousands of dollars each year due to low hash rates and high costs of mining hardware, it is safe to say that most miners will not achieve full ROI for at least several months.

Mining Cost and Profitability

According to the CryptoCompare mining calculator, 1 TH/s of hash rate can generate 0.00000742 BTC (742 satoshis) per day. The generation of new bitcoin is irrespective of electricity cost. Electricity cost only comes into picture when we talk about profitability. You can read our detailed post about How to find mining costs?

The latest S19 pro bitcoin miner has a maximum hash rate of 110 TH/s for a power consumption of 3250W. Let’s assume the average electricity cost is $0.1 per unit. According to the crypto compare mining calculator the S19 Pro is in 20% profit at the current bitcoin price ($11600) and current mining difficulty.

Most of the profit is taken by the electricity cost that’s why every miner wants to minimize the electricity cost. We are taking $0.1 cost per unit however in some countries the cost is lower and in some countries, it is much higher. Miners are in profit at the current price levels assuming their electricity cost is $0.1 or less than that. The cost of mining is around $9000-$9500.