Everything you need to consider before you start mining
Published in · 4 min read · Dec 20, 2021
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Bitcoin mining profitability is a very complex matter. There are many factors and variables that can affect your revenue. Electricity consumption and costs is one of the most important of them.
Paying the electricity bills is the most significant expenditure for cryptocurrency miners in the long term. It’s also a critical factor to determine mining profitability.
Many large-scale miner operations set up camp in specific locations just because of their low energy prices.
How much you spend on energy will depend on two factors:
- The electricity price where you’re located.
- The power consumption of your mining setup.
Once you have this information, you can calculate how much you would spend on electricity for your crypto mining hardware.
Let’s say that you own a Bitmain Antminer S19 Pro, which consumes 3250W. Let’s also say that the cost of electricity where you want to mine is $0.1 per kWh (kilowatts per hour). That said, you can calculate how much running your S19 all day long will cost you using the following formula:
- First, you need to convert watts to kilowatts: 3250W = 3.25kW.
- Now, you have to calculate how many kW you’d use in a full day: 3.25kWh x 24 hours = 78kW per day. Of course, this will change depending on how long you plan to run your miners.
- You’ll also need to calculate how much those kWh will cost you according to your location’s energy prices: 78kW x $0.1 = $7.8 a day.
- Finally, multiply the final number by 30 to know your monthly expense in electricity: $7.8 x 30 = $234.
Although there are more precise ways to calculate electricity costs, this simple formula will let you estimate your power expenses accurately enough to know whether your operation will be profitable or not.
Mining hardware power consumption is the central part of calculating electricity expenses, but not the only one.
Most miners install dedicated cooling systems like air conditioning units to ensure maximum performance and lifespan for ASICs. Damp or humid locations with poor airflow also need fans to renovate the air and keep it moving.
The electricity this equipment utilizes adds to your overall consumption costs, and although it’s much less than what an ASIC miner consumes, it can become significant in the long term.
It would be best to consider these additional costs when calculating your profitability, revenue, and expenses for your mining operation.
Finally, there are different alternatives to save energy, reduce costs, and improve profitability.
Recycling ASIC machines’ heat is one of the most popular methods among domestic miners.
Many people redirect the heat generated by their mining hardware to heat their homes in the winter, making up for the extra costs of cooling systems needed in the summer.
Generating your own energy at home is also a good idea to cut electricity expenses.
A single solar panel can generate between 250 and 380W on optimum weather conditions. That means that, on average, a solar panel will cover roughly 10% of an S19 Pro power consumption per hour.
Mining is a long-term game, so even if these techniques may look small, they can add up to considerable savings after a couple of months.
There are other methods to reduce costs or increase your revenue and boost your profitability. Check out our article to learn more:
Electricity costs is one — if not the most — important factor in running a profitable cryptocurrency mining operation.
It is crucial that you calculate your energy expenses according to your local prices and your hardware consumption in advance to determine if it’s worth it to even start mining. We hope this article will help you do that.
Happy mining!
