There is also another way – mining Bitcoin.
If you are into mining Bitcoin, or any other crypto coin for that matter, you will need to make sure that you are doing it in the best possible way to maximize your profitability.
This is where a Bitcoin mining calculator comes to your rescue.
You will have to input several parameters to see how long it will take for you to break even or make profit from Bitcoin mining.
Therefore, it is important for you to know how exactly you should use a Bitcoin mining calculator.
This will help you to decide whether or not you are wasting your time, effort and money on your mining endeavor.
Through this article you will come to know about it all along with the reasons to use such a calculator.
Add to that, this article will also tell you how to generate results by considering different vital factors and read the results just like a pro.
How to Use Bitcoin Calculators Like a Pro?
The crypto space has changed dramatically over the years and the complex things have become more complex today.
Therefore, whether you are engaged with Bitcoin trading, investing or mining, it is quite hard to make profits if you do not follow the right approach.
Confining the discussion to Bitcoin mining, the first step to ensure that you are doing the right thing in the right way is to use a Bitcoin mining calculator.
A crypto mining calculator typically uses thousands of diverse data points to calculate the estimated rewards from the mining process.
Though it is theoretical, this data will help you a lot in planning your next moves.
However, you should not rely entirely on the data.
However, users are not much familiar with a Bitcoin mining calculator and do not know how or why they should use it.
They have a lot of queries regarding the mining calculators. This article will clear all your doubts.
First, in order to determine the feasibility of Bitcoin or crypto mining, you will need to know the fundamentals of crypto and crypto mining for a better and more comprehensive understanding.
Cryptocurrencies are envisaged as a decentralized currency which looks very exciting on paper and prospects but it is very hard when it comes to real-life applications due to the several bottlenecks existing.
Since it has no physical form, unlike fiat money, special attention should be given in order to prevent these coins from being counterfeited.
These digital or computer currencies need an expert and skilled programmer to develop the lines of code.
This can lead to the coding guys taking undue advantage over general users.
This is why crypto mining is needed – to keep everything fair and well organized.
To put it in simple words, crypto or Bitcoin mining validates the transactions and controls every activity that is performed on the blockchain.
It is quite profitable, if done correctly, which is why large and power mining firms are engaged in it and are making substantial amounts of profit by using tailored and powerful equipment.
However, ordinary people engaged in Bitcoin and crypto mining tend to do it all wrong and end up on the losing side having to pay huge electricity bills and do away with their aged mining equipment.
Therefore, it is extremely important to know about crypto mining inside out, especially Bitcoin which usually comes with high mining difficulty.
And that is the primary reason to use a Bitcoin mining calculator.
Also, using a Bitcoin mining calculator is quite easy which is another good reason to use it.
Parameters to Enter
As said before, using a Bitcoin mining calculator is quite easy. You do not need to do much to use it and generate results.
As it is, these calculators come with some pre-filled information that will help in the calculation.
The information filled in the Bitcoin mining calculator is however updated on a regular basis and includes:
- The prevailing price of Bitcoin in the market
- The block reward offered for mining Bitcoin and
- The mining difficulty.
However, to make the tool more useful for you, you may enter a few other specific details into the Bitcoin mining calculator.
Some of the details you can include in the Bitcoin mining calculator are:
- The cost of the mining hardware that you are using or intend to use
- The hash rate of the hardware
- The amount of energy the equipment uses
- The cost of energy and
- The fees charged by the Bitcoin mining pool.
Remember, the more parameters you enter in and the more information you feed into the Bitcoin mining calculator, the more accurate the results will be.
Calculating the results on a crypto mining calculator, as said earlier, is quite easy.
All you have to do is click on the ‘calculate’ button once you are done with entering the necessary parameters on the Bitcoin mining calculator.
The results will be displayed automatically.
However, the way in which these results will be displayed will depend on the specific type and features of the calculator you are using.
There are a few particular calculators that will show you the likely profits on an hourly, daily, weekly, monthly, and yearly basis.
For example, the CoinSmart calculator typically displays results in Canadian dollars.
Then there may be a few specific Bitcoin mining calculators that may allow you to modify the prevailing Bitcoin price and other values that are pre-entered in it simply to conjure up the potential scenarios in the future.
At this point, it is important to keep in mind that a few specific factors such as the mining difficulty and the current price of Bitcoin can change pretty quickly.
This will need you to make sure that the results generated are up to date and the calculations are accurate and done based on the current data and not on the basis of previous results.
This simply means that every time the cost of electricity consumed by your crypto mining equipment changes, you will need to make fresh calculations altogether.
Talking about costs, there may be a few specific types of Bitcoin mining calculators that may not take the upfront cost of the mining equipment into account.
However, such costs can add up to thousands of dollars and even multiples of thousands of dollars if you have set up a Bitcoin mining rig with several ASIC miners.
And, during the mining process, which is continual, a lot of heat will be produced and therefore you will also need to invest in a cooling system and fans to ensure your equipment runs well and stays efficient.
This is also a considerable amount of investment which will need additional electricity to function as well, thereby adding to your monthly electricity bills.
With all these costs to consider, it may take months or even years for you to break even and make profits on your investment.
The process to generate the results on a crypto mining calculator starts with visiting the mining calculator page.
Here you may see a gist of the things available for you to use such as:
- The number of coins
- The merged mining coins
- The algorithms and
- The multi-algorithm pools.
Once you get familiar with thee you can now make your entries on the calculator which should typically include:
- The name of the dataset
- The country selected
- Setting the electricity costs
- Filtering the algorithms
- Filtering coins with low volumes
- Filtering multi-algorithm pools and
- Loading data from the database of the hardware provided the speeds are available.
When these steps are completed, the final result of the estimated profitability in your mining process will be displayed on the results page.
This result will have different vital components such as:
- All the coins
- The estimated rewards
- The algorithms
- The estimated costs and of course
- The estimated profit.
Additionally, the results will also display the software on which the coin is mined and available such as ASIC, Windows, or others.
If this is asking a bit too much from you, then there are also two other alternative ways to generate crypto mining calculator results such as:
- You can export the benchmark results to your crypto mining calculator or
- You can click on the link of the crypto mining calculator that may be shared by some different user and import the results to your own calculator and then save it as a distinct dataset.
If you want to share the dataset with anyone else, you may edit all the parameters that are available on the top filter row.
Reading the Results
Now it is time to know the most important segment of this article – reading the results generated by the crypto mining calculator.
Typically, you will come to see several different data, notifications, and tags that will raise your interest through the coins, the mining calculator, the algorithms, and the hardware.
You will need to know about all of these in order to read the results produced by the Bitcoin mining calculator correctly like a pro.
Low volume coins:
The low volume coins tag typically comes up every time the last 24-hour trading volume of the coins on the exchanges hits less than a specific mark in US dollars.
These coins typically fall under the speculative category because these are pretty hard to sell.
The spike tag typically represents the time when the recent price of the coin or the reward for mining the coin jumps up.
Normally, if a coin shows frequent spikes you should not consider it to be reliable.
It will usually indicate that the mining difficulty or the price of the coin is changing frequently.
These are the pools which you can use to mine different types of algorithms but get paid for mining only one particular type of coin.
These pools usually have two groups namely auto-exchange pools and marketplaces.
The rewards for these pools are normally shown on the basis of their API reports.
Unrealistic rewards or exchange rates:
If in the results you see unrealistic reward or exchange rate such as one coin in the list has a daily estimated profit of 20 USD and a second coin has 2 USD, it indicates that the variables used in calculating the estimated rewards are not realistic.
There can be several reasons for such a thing to happen and some of these reasons are:
- A significant drop in the mining difficulty level of a specific crypto coin
- No one is mining a specific type of crypto coin due its low volume
- The market price of a coin provided by the third party is not correct and
- The algorithm may have changed and the data was not updated subsequently.
However, you should remember that the predicted earnings on crypto mining are typically calculated by multiplying the projected reward for mining a coin with its price.
This means that if any factor affects one of these two variables, it will have a significant impact on the estimated earnings from crypto mining displayed by the mining calculator.
Factors to Consider
Therefore, it is elementary that you know about these differential factors that may affect the estimation of a crypto mining calculator.
There are several different factors that may affect the profitability of mining Bitcoin or any other crypto coins for that matter.
Typically, people consider only the cost of energy and equipment while calculating the profitability in Bitcoin mining, which usually gives them a rough estimate.
If you really want the Bitcoin mining calculator to give you an accurate and good ballpark figure, there are a few other vital factors that you should consider carefully and seriously.
- The cost and durability aspects of the initial hardware of the mining gear
- The hash rate of the specific network you want to mine on
- The price of electricity in the location of your mining set up
- The mining pools and their rewards and fees and
- The future value of the crypto coin you wish to mine.
Remember, the mining rewards play a significant role in determining the profitability in crypto mining.
Therefore, you will need to be quite intelligent and knowledgeable about it and also have enough capital to invest in order to maximize your profit potential from mining.
Therefore, to calculate the profit in Bitcoin mining it is not only the 6.25 BTC reward that you should take into account.
There are also several other cost factors that come along with it and that you need to take into account as well.
Here are all the factors that you will need to focus on while calculating the profitability quotient in crypto mining.
As you may know, it takes about 10 minutes to mine a new Bitcoin.
The Bitcoin code needs to set the hash difficulty accordingly in order to maintain that time interval.
It may be increased or decreased depending on the mining activity on the network.
Network or mining difficulty indicates how difficult it is to create a new block of Bitcoin.
On the other hand, the mining difficulty also indicates how strong the network and the resources are in order to prevent a 51% attack.
Ideally, as far as Bitcoin mining is concerned, the difficulty was 1 at the time of its inception but today it has increased to about 29.794 trillion.
This difficulty level changes according to the number of participants on the network as well.
Therefore, to ensure you mine successfully and constantly, you will need to keep some provisions to add some extra power in your mining process when the difficulty level increases in the future.
Otherwise, you will either have to incur loss or add more hardware as your last resort.
If not, you will have to switch over to a different crypto coin for mining and start everything all over again!
Halving of mining rewards:
The Bitcoin reward is usually halved after every four years automatically.
At present it is 6.25 BTC. Initially, in 2009 it was 50 BTC when a simple home desktop computer was enough to mine a Bitcoin.
Over the years as more and more people started to take part in Bitcoin mining things changed and became more difficult and at the same time Bitcoin reward was halved to 25 BTC in late 2012.
With further increase in popularity of the coin and consumption, Bitcoin reward was once again halved in 2016 to 12.5 BTC and 6.25 BTC in May 2020.
The next halving of Bitcoin reward is therefore scheduled in 2024.
Usually, Bitcoin reward is halved after each set of 210,000 blocks is mined, which takes approximately four years’ time.
Considering this rate of halving and the total Bitcoin circulation to be 21 million only, it is expected that the last Bitcoin will be mined in 2140.
You should factor in the halving event while calculating your mining profit because if you do not things might go the other way instead of your mining profit going up naturally.
Crypto mining will only be profitable even after a halving event if only the value of the specific coin appreciates simultaneously.
This will counter the periodic reduction in the block reward.
Apart from that, with every halving event the risk of miners leaving the network increases due to reduced rewards and increased cost of mining which makes it unprofitable for them.
This will eventually push the value of the coin further down. More and more miners will leave the network resulting in a death spiral.
However, this may not have any direct effect in crypto mining profitability initially but it is a good factor to consider looking at the future.
Hash rate, as said earlier, is the computational or processing power of a computer used in Bitcoin or crypto mining.
This is measured in hashes per second and is denoted by H/S.
When the hash rate is higher it is represented in kH/S or kilo hashes per second, MH/S or Mega hashes per second, and so on.
Therefore, higher the hash rate, the faster will be your computer.
This will increase your profitability and therefore is an important factor to consider.
This means that the more computing power used in mining Bitcoin, the easier it will become to mine one coin, or in other words, to solve the complex mathematical puzzle.
Therefore, if you think that you have been successful in mining Bitcoin pretty fast it could be that your mining equipment was really fast or was very lucky.
Cost of electricity:
Mining crypto or Bitcoin will need a lot of energy. Therefore, you should have adequate resources to pay for huge monthly electricity bills.
It will be even more if you have a multiple miner set up.
If you live in a place where electricity does not come cheap, expect to have a not-so-pocket-friendly electricity bill.
Combined with an increased difficulty level, high electricity bills will not make your Bitcoin mining venture profitable, even if Bitcoin is at an all-time high.
Power consumption during mining is not restricted only to the energy spent by the mining equipment per second.
If you do not live in Iceland, you will need a proper cooling system which will also need power to operate.
You will need to consider all these costs while calculating your Bitcoin mining profitability.
Typically, people use a mining pool to increase their profitability chances and at the same time reduce the need for huge amounts of computational power.
Since the resources are shared, the cost of computational power or hash power in other words, is reduced.
However, at the same time, the amount of profit also gets reduced since it is shared among all the pool members.
F2Pool and Slush Pool are two of the oldest pools with F2Pool being the largest Bitcoin mining pool as of now.
It comprises nearly one-fifth of the entire network of Bitcoin.
One of the most significant reasons for the F2Pool being so popular among the Bitcoin miners is its payout method.
Typically, it is referred to as the PPS+ payment method and it takes away much of the risk from the miners.
This is because this pool pays out transaction fees and block rewards to the miners irrespective of whether or not the pool is mining each block successfully itself.
As for the fees charged by the mining pools, it typically ranges between 2.5% and 4%.
This pool fee is paid by the users for enjoying simplicities like shared resources and taking care of the major software setup by the pool admin.
This will typically come to anywhere between 1% and 3% of your individual mining reward, which is not at all a big deal, especially considering the benefits that you enjoy in return.
In the end, it can be said that the profitability in crypto mining largely depends on the type of coin or the network you use.
Bitcoin has a high value in the market and therefore it will be profitable if you mine Bitcoin.
But then the difficulty level will be high and the competition will also be very high because everyone will want to mine Bitcoin.
On the other hand, a crypto coin with low value may be easier to mine due to fewer numbers of participants and lower difficulty level but then the eventual earning may be pretty low.
If it is too low to cover the cost of mining then your effort will not be profitable.
Add to that, the cost of hardware, software, regular maintenance and upkeep, rent for your mining space assuming that you do not have a large house, and all other factors should be taken into consideration while calculating crypto mining profitability.
Therefore, all these need a lot of time and effort which may reduce your focus on your primary intention – making profit from Bitcoin or crypto mining.
It is for this particular reason you should use a reliable crypto mining calculator to do the hard work for you.
This will not only save you from a lot of hassles but will also let you know whether or not your crypto mining effort is as productive as desired or whether you are incurring loss and should leave crypto mining and focus on some other avenues to earn money.
Crypto Mining Calculators to Use
Please note that all these mining calculators will only provide you with a rough idea about the profitability.
Your actual income will however depend on the current mining conditions and it may be quite different from what is estimated by these calculators.
Now, to help you out in your search, here are a few good crypto mining calculators to use.
- CryptoCompare, which is considered to be one of the best and easiest of all crypto mining calculators to use
- CoinSmart, which offers more detailed results in Canadian Dollars based on parameters like mining difficulty, hardware cost, exchange rates, and others
- CryptoRival, which offers a dedicated mining calculator for more than one hundred different crypto coins and
- CoinWarz, which allows you to customize the values according to your needs and suitability.
Remember, this is not an exhaustive list and is in no specific order. Make sure that you choose the one that is convenient for you to use from the several different types of mining calculators out there after research.
Finally, some expert tip: In order to ensure that you make profits from Bitcoin mining, you will need to use the right kind of hardware, probably a powerful ASIC device.
You will also need to lower the cost of electricity if it is possible.
These are the two major factors that will eat away your Bitcoin mining profits if not managed properly.
You will also need to research about the exchanges on which you can sell your coins when the right time comes as well as the mining pools that you want to use while mining.
Remember, crypto by itself is quite a risky venture and crypto mining is even riskier.
Therefore, you should be aware and careful about the factors that may affect your crypto mining profitability, as mentioned earlier.
Since Bitcoin mining is highly competitive, you will need to stay profitable in order to be in the race.
Also, keep in mind that profitability in mining is highly unpredictable.
There is no specific tool, magical formula or an article that can summarize the potential profits or losses in Bitcoin or crypto mining.
It largely depends on the mining conditions.
There is no doubt that Bitcoin mining has become a lot more difficult today but it is not impossible to make profits through it.
As pointed out in this article, you will need to calculate your profitability on a regular basis by using one of the best Bitcoin mining calculators.