Bitcoin and Bitcoin mining and if it is actually profitable to do so in 2018.
Quick recap of what bitcoin is
Bitcoin essentially is a currency whereas a decentralized ledger meaning that all transactions and verifications of transactions are not going through a single point like a bank. It is actually going out to a network of computers that helps make the transactions very secure and accurate. This network of computers is actually the bitcoin miners that are doing the work. These computers verify the transactions and the miners get paid for doing so.
In this article, we’ll be focusing on Bitcoin and ASIC miners in particular the Antminer s9.
The Antminer S9 is by far the most profitable miner that you could buy. It runs at about 14 TH/s at 1350 watts power consumtion. If your power costs were about 10-12 cents per kilowatt, mining with the Antminer S9 at that rate would be around $100 a month.
- 1.3kwH x 24 (hours) x 30 (days) = 936kwH (monthly power consumption)
- 936kwH x 0.12 (cost per kilowatt) = $112.32
One of the hard things about the Antminer s9 is actually buying it. Normally on Bitmains website before this Bitcoin boom, Antminer S9 was about $1700. But nowadays they’re selling out everywhere, everyone wants to mine Bitcoin everyone wants a piece of the action and because of that people are buying them and then reselling them at a much higher rate like $4000 per unit. If you just check it on Amazon then you can probably see that Antminer S9 price is averaging at the range of $4600-$6000 for one unit.
What circumstances actually affect bitcoin mining profitability?
The first obvious one is going to be Bitcoin itself, the current value of it. Bitcoin surged up almost to 20,000 in December 2017. Right now at the time of writing this article Bitcoin is it’s settled down to about $11300, somewhere in that range.
The other driving factor is going to be Network difficulty. This is a big topic that a lot of people don’t know quite about, that are just getting into mining and that’s going to be the driving force behind any of the profit that you make with Bitcoin.
This network difficulty or network hash rate is a measurement of all the miners on the Bitcoin network. The more people there are or the more miners there are the more hash rate there is on the network meaning the less money that you are going to make, the more people are fighting for that reward that everyone else is going for.
Antminer S9: is it a moneymaking machine?
What Antminer could actually generate at the time that I was doing the research in December 2017. The profit calculation was about $1100 per month and it would mine just shy of one Bitcoin per year. It was about 0.9 Bitcoin that is $15000 at the time. So according to the calculations it would have paid itself off in a month and a half.
I got my Antminer S9 up and running on December 11th and 10 days later from the original projections of $1000 – $1100 per month, the projected Bitcoin mining went from 0.9 Bitcoin per year to 0.7 in just 10 days. It was a 22% drop, in Bitcoin terms that is like 3,300 dollars. When I was getting to this, I realized that there was going to be diminishing returns over time on the network hash rate and the difficulty. But you would expect Bitcoin and the price to be driven up so the fact that we saw a network difficulty increase of 22% in 10 days didn’t exactly translate into a 22% increase in value of Bitcoin in that same 10 days, in fact it dropped.
Right now since the value of Bitcoin is down quite a bit from where it was, it is right around or just over $11,000. Average daily payouts are $30 a day but back when Bitcoin was a bit higher daily payouts were closer about $40 a day. This is normal this is gonna fluctuate try not to freak out about it although it’s a little bit shocking to see. Another thing to take notice is the pool scoring hash rate. When first starting to mine in December the pool hash rate was about 1.4 and in one month it went up to almost 2, which is a sufficient increase for the pool.
As of January 2018 even at the lowered rate of Bitcoin, the total income over that first month (December – January) mining with Antminer S9 is about $856. Now if we were talking about Bitcoin value being back in December 2017 in the $15000-$16000 range the balance for monthly mined with Antminer S9 would be somewhere around the $1100-$1200 range. However, the key metric to calculate the returns can’t be counted on dollars per day because the value of Bitcoin fluctuates so much that it has to be counted as actual Bitcoin produced per day. Back in December when first started mining it took just under four days to mine 0.01 Bitcoin as of January it is a little under 5 days. So we will see how much that decreases over time.
The future of Bitcoin mining with Antminer S9
The other saving grace for profitable mining with Antminers is going to be the introduction of different alt coins that also use the SHA-256 encryption method which is used to mine coins with Antminer S9. Take Bitcoin cash for example, as Bitcoin cash becomes more of a mainstream type of cryptocurrency we are might see minor shift of their processing power from Bitcoin over to Bitcoin cash. Which could result in bringing down the Bitcoin network difficulty and making it more profitable to mine. To keep the profitability of mining with Antminer S9 you can just take the hardware and use the processing power over to Bitcoin cash. However, the more miners getting in to the market the more flooded it is going to be and the harder it will be to turn a profit.
All the projections above are based on a constant where Bitcoin is rated at $17000. It is hard to tell where the Bitcoin price will be at in over the next 6 or 11 months. Investing into cryptocurrency market is definitely a risk as you can see that the network difficulty is going to outpace the value of Bitcoin, at least from what we have seen. Nevertheless, it could change; we could see some crazy jump up of a 500% like the one we did not so long ago. It really depends especially on how other altcoins do, how the general market does.
The other part of the future is the block reward. Currently if you are a solo miner meaning that you are not part of a mining pool of any sort and you find that one lucky block that pays off, currently the reward is 12.5 Bitcoin which at today’s rates is over $200,000 in a reward.
But the chances are is that you’re not going to get it, it would take a really long time of mining a lot of power a lot of hardware cost to even get remotely close to finding that one lucky block. That is why most consumer miners are part of a pool, where they are paid based on contributing their hashing power toward the total hashing power of the pool and get paid out on a daily basis.
Another thing to note is, every four years the reward for block money is going to be reduced by half. Two years ago in 2016 the reward was cut by half and the next one is coming up in 2020. Instead of getting 12.5 Bitcoin reward for a found block in 2020 it is going to be 6.25 Bitcoin.
As of current rates on network difficulty and Bitcoin price, mining with Antminer S9 is still profitable. Just like any volatile market, there is definitely reward risk but with that risk comes great reward.
Another the most profitable way of making money in cryptocurrency boom is to accumulate as much cryptocoins as you can and HODL it. So HODL on to that Bitcoin. Definitely do your research on any miners that you find. If you have ability to get ASIC miners cheap and sell them for more you are going to make much more money doing that and then just buy into Bitcoin at the current rates. That way you are going to have your money well spent just by investing in cryptocurrency.
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