Bitcoin Mining 2021: Bitcoin Mining Calculator, Hardware & Earning Experience
10 Stars
This is partly because more and more people are trying to make a profit from Bitcoin mining, and partly because with every Bitcoin "discovered" it becomes harder to find the next one.
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What is Bitcoin Mining?
Although the price of a Bitcoin is not as high as it was at the end of 2017 before the crypto bubble burst, many users still see Bitcoin mining as a simple sideline that requires very little time.
Sure, in theory you just provide your computing power and then wait until a Bitcoin is discovered. And you're already a few euros richer. In practice, however, as is so often the case, it looks somewhat different. In the meantime, it has become difficult to actually make a profit with mining, and not only for technical reasons.
For this reason, there are already quite a few miners who no longer mine for Bitcoins, but instead mine Bitcoin Cash or Bitcoin Gold, for example. These cryptocurrencies are also based on a blockchain and can therefore be mined.
The question now arises whether it is still worthwhile to chase bitcoin using computing power, or whether the ship has sailed in the meantime. This Bitcoin mining review should also give an outlook on whether it is smarter to mine alone or in a pool, which tools and upgrades are offered for mining and how to calculate the Bitcoin mining earnings to be expected.
Bitcoin power consumption
Bitcoin's hunger for energy has grown strongly in recent years. More and more energy is needed to mine the cryptocurrency. In 2017, for example, the digital currency still consumed 6.6 terawatt hours of electricity per year. In October 2020, it was already 67 terawatt hours.
It is considered one of the biggest problems that opponents of the crypto scene like to use.
Currently, the mining process is considered the top energy guzzler - with a consumption of electricity equivalent to that of an entire country, e.g. Argentina.
How does bitcoin mining or bitcoin farming work?
Bitcoin is based on the so-called blockchain. Since the coins are traded continuously and worldwide via the Bitcoin network, it must be possible to detect and process these transactions. Bitcoin should not be thought of as a classic currency issued by a bank or a country.
Rather, the entire community that trades in Bitcoins is its own bank. The users trade with the cryptocurrency, but at the same time it must be ensured that transactions are documented to ensure that a coin has actually changed hands.
The Bitcoin network achieves this by collecting all transactions of a certain period and compiling them in a list. Such a list is called a "block". The blockchain is therefore nothing more than a series of stored transaction lists.
All transactions must be entered into this blockchain. Now, the Bitcoin network is not a bank that has a department responsible for documenting the transactions that have been made.
This is where the Bitcoin miner comes into play. It is responsible for confirming transactions and entering them into the respective block. He makes his computing power available for this process. For this, he receives a fee in Bitcoin, which is financed by the transaction fee for Bitcoin trading.
You could say that a Bitcoin miner takes on administrative tasks. He makes sure that every transaction is traceable and can be viewed afterwards at any time. Whenever a block is "finished", i.e. a certain period of time has passed, the miners start their work and verify every single transaction in this block.
Hashes and Blockchain
So how can miners confirm that the transactions made in that block are coherent and have integrity? If a block period has expired, the information of all Bitcoin purchases in this period is subjected to a check. Through mathematical processes, which in turn require computing power, a checksum is obtained, which is called a "hash". This hash guarantees the authenticity of the transactions in this block.
A hash contains all the information of the block in a highly abbreviated and encrypted form. Each hash consists of letters and numbers and is unique. When the hash of a block is completed, it is attached to the end of the blockchain. It is worth noting here that information from the hash of the previous block is also included for the hash so that the blocks cannot be manipulated.
Thus, the hash always confirms that not only the current block but also the one before it is valid. These hashes therefore ensure that all blocks, and thus all previous transactions, are valid.
Every time a hash is completed, the miners get a reward in Bitcoin. Generating a hash from a block is not particularly difficult for a computer. That's why the Bitcoin network was designed in such a way that it becomes more difficult to mine new Bitcoins with every Bitcoin mined. The "mining difficulty" thus increases steadily, which means that more and more computing power is needed to generate a hash.
Bitcoin mining thus fulfils an important function: it ensures that transactions made are verified and stored. Due to the encryption in the form of hashes, the actual trading partners of a transaction can no longer be identified. The miners receive a reward for this task.
Do you want to mine Bitcoin yourself or use a Bitcoin mining pool or cloud mining?
If you want to become a Bitcoin miner yourself, you have various options for doing so. On the one hand, you can upgrade your computer with various tools, software and hardware and start mining for Bitcoins yourself. Alternatively, you can join a community that searches for the popular coins together and shares the profits. Such a community is called a Bitcoin mining pool.
How does Bitcoin mining work in a pool? Due to the fact that the mining Bitcoin difficulty is already relatively high, it is rarely worthwhile to mine for Bitcoins on your own. The probability of successfully creating a hash is too low.
In most cases, Bitcoin creators therefore rely on a mining pool that they join. Depending on the size of such a community, the probability that hashes are actually generated and bitcoins are found naturally increases. At the same time, the individual miner receives a smaller share per bitcoin, because as the size of the pool increases, the bitcoin mining earnings have to be divided among more participants.
As a result, the larger the pool is, the expected earnings for the individual miner become more regular and more calculable.
Solo mining is not worth it
If, on the other hand, you decide to mine for Bitcoin on your own, it's just like the real gold prospectors in the old days. Most of the time, you won't find anything and thus won't be able to earn any mining money. Rarely, however, a few very lucky people will strike a vein of gold and can then enjoy a high profit, which they do not have to share with anyone.
Due to the fact that the mining difficulty of Bitcoin is now very high, Bitcoin miners will in most cases come away empty-handed if they mine alone. If you are looking for a steady income from mining, Bitcoin mining pools should be the better choice. We recommend our test winner Miner The Bitcoin Miner, where you can achieve very good returns.
Bitcoin solo mining advantages and disadvantages
Solo mining is usually only carried out by large companies or mining farms that also own the corresponding hardware. Of course, individuals can also engage in solo mining, but the success rate is far lower, as profitable hardware is usually not economical for private individuals.
Pros
Cons
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The most popular Bitcoin mining pools
The efficiency and size of Bitcoin mining pools are constantly changing. The two largest pools in particular compete very strongly with each other and constantly outrank each other. At the moment, the Bitcoin mining pool "Antpool" is particularly popular. Antpool's market share is around 14%. This means that 14% of all hashes and thus of all mined Bitcoin are found by this pool.
The second large pool is called btc.com. These two market leaders, Antpool and btc.com, are both based in China. For people interested in mining, it could be difficult to join one of these pools, as communication is mostly in Chinese.
Bitcoin mining participants might be better advised to join the third-largest provider, "SlushPool". Slushpool was the first large Bitcoin mining pool and is based in the Czech Republic. Its market share is currently around 10%. The next largest mining pools also come from China, for example ViaBTC, btc.top or F2Pool.
It should be noted that such large pools usually do not only mine the classic Bitcoin. Often, Bitcoin Gold Mining and Bitcoin Cash Mining are also operated in order to offer participants a higher level of security through the broader exhibition of being able to constantly mine new coins.
Due to the size of the pools, however, one must reckon with the fact that the mining earnings for the individual are very low. Whether it still makes sense to join a mining pool nowadays is questionable. Higher returns, but also higher risk, are certainly achieved in trading.
How to equip my PC for Bitcoin mining
If you want to join a Bitcoin mining pool, you should upgrade your computer accordingly in advance. The Bitcoin mining earnings are distributed by the pools to the individual Bitcoin miners according to the computing power provided. The more power the individual miner contributes to the pool, the higher his share of Bitcoin that is paid out to him.
Nowadays, there is a wide variety of hardware, mining tools and software that can be purchased to increase mining efficiency. However, it is important to bear in mind that due to the now very high Bitcoin mining difficulty, it can take a very long time before the investment in one's own computing power pays off.
ASIC Miner
How does Bitcoin mining work best? In the meantime, countless companies have established themselves that offer so-called "miners". Such devices are, so to speak, the "pickaxe" of the Bitcoin prospector. They have enormous computing power, which should make mining as efficient as possible. Here it is important both that as much power as possible is produced and that the power consumption remains as low as possible.
Probably the best-known provider is Bitmain with its "Antminer", which is available in a wide range of variants. The latest generation, the Antminer S17 Pro Bitcoin Miner, has a hashrate of up to 62 TH/s and consumes at least 1296 watts per day. The hefty price is currently €2390.
Whether such a miner is worthwhile for the interested user depends not only on the current price of the Bitcoin, but also on the electricity price that the Bitcoin miner has to pay. To find out whether the purchase is profitable, one has the option of using so-called mining calculators. Here you simply enter your electricity price and the expected hashrate and it will show you whether mining would be profitable.
Bitcoin Mining Hardware
In order to be able to mine successfully, you need a lot of computing power. If you want to try out mining, however, you do not need an expensive ASIC miner. Even your own PC already provides computing power.
At the beginning of 2018, the price of powerful graphics cards suddenly rose. The reason for this was that demand was growing, as miners were upgrading their PCs with these graphics cards to mine Bitcoins. With the appropriate software, you can easily turn your PC into a Bitcoin miner.
Although ASIC miners are of course vastly superior to graphics cards, newcomers can still gain their first experience with mining if they have a powerful graphics card. This principle is called "GPU mining".
It should be noted that graphics cards and other tools are actually no longer competitive today. Due to the high mining difficulty, the high competitive pressure and more and more ASIC miners being sold, the classic mining tools no longer contribute enough power to the pool to be able to generate profits.
So it makes little sense today to upgrade your PC with mining hardware to mine Bitcoins. In the vast majority of cases, it will be a losing proposition for the investor.
But if you wanted to invest in your PC anyway because your business or hobby (e.g. high-end gamer) requires it, you can consider the possibilities of mining. In the vast majority of cases, however, the price of electricity will prevent you from making a profit.
Bitcoin Mining Software: What is the best mining provider?
In order to actually start mining, you need powerful Bitcoin mining hardware and Bitcoin mining software (the only exception is the so-called Bitcoin cloud mining). The person who mines for Bitcoins alone must connect to the blockchain.
To enable this connection between the hardware, which provides the computing power, and the blockchain, one needs special software, which is offered in various forms by various providers.
Even if you want to join a mining pool, you need software. Only through this can one's own computing power be brought into play. Every Bitcoin miner also needs a Bitcoin wallet so that he can actually store the Bitcoin earnings.
What types of Bitcoin mining software are there?
To make a profit from mining, you need reliable mining software. The large pools usually provide such software free of charge. The administration is financed by a pool fee (usually 1%).
If you want to mine Bitcoins on your own, or if you also want to mine Bitcoin Gold or Bitcoin Cash, you first need to find the right software.
The most important feature of a mining software should be that the connection to the blockchain works smoothly. However, most variants have a variety of other useful tools.
For beginners, The Bitcoin Miner is probably the most suitable provider. The main advantage of The Bitcoin Miner is that no expensive equipment is required and you can mine profitable Bitcoin without a high CPU load. In addition, registration is simple and free of charge.
Bitcoin Mining Calculator: How to calculate your returns
To find out whether it is still profitable to become a Bitcoin miner yourself, various Bitcoin mining calculators are available on the internet.
These allow you to compare the expected energy consumption with the expected mining profits. Both the current Bitcoin price and the current mining difficulty are included in the calculation.
In this way, you can easily calculate whether Bitcoin mining could yield profits for you and how long it would take until the investment in a Bitcoin miner pays for itself.
Of course, even a mining calculator cannot predict how the Bitcoin price will develop, so there are always uncertainties in such a calculation.
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Is mining still worthwhile today?
In short: No. Although the Bitcoin price is rising again at the moment, so that it seems attractive to get back into mining, the mining difficulty is now very high and the competition is also huge.
It has already been established that successful mining requires a very powerful miner and also a very cheap electricity provider. Even if these requirements are met, it remains highly uncertain whether the investment will ever pay off.
From one day to the next, the Bitcoin price can fall again, so that the miner would then have to be switched off in order to avoid losses due to the high electricity costs. In addition, the mining difficulty keeps increasing; already today almost 80% of Bitcoins are mined. More and more power has to be generated to achieve the same Bitcoin mining profit. If one invests in Bitcoin mining today, losses are almost programmed.
Of course, it cannot be ruled out that the Bitcoin price, which is currently rising again, will break new records and make mining worthwhile again. Ultimately, all calculations depend on the development of the Bitcoin price, which is almost impossible to predict.
The possibility of making profits from mining therefore remains, but the probability of this happening is very low. If you want to start mining today, you have to consider it a high-risk investment. However, if you already have a high-performance miner, a quick test with a Bitcoin mining calculator will show whether it is worth running it at the moment. Ultimately, it will be smarter to fall back on Bitcoin mining alternatives.
Bitcoin Calculator: Cost/Benefit Calculation
Bitcoin Mining Calculator: How to calculate your return on investment
To illustrate how best to calculate with a bitcoin mining calculator, we did the test. For the example, we assume that the mining difficulty and the bitcoin price (7000€, as of June 2019) would remain the same, which is explicitly not the case in reality.
To be able to mine, we buy the Bitmain Bitcoin Antminer S17 Pro 53 TH, whose performance should go up to 62TH/s (according to the manufacturer). The price (as of June 2019) is 2390€ and it is supposed to consume at least 2790 watts per day.
Of course, the ASCI-Miner does not run at full speed all the time, nevertheless, in this example we assume that it manages 60TH/s throughout. We set the wattage at 2800 watts. In addition, we pay 0.18ct/kWh for electricity, since we want to mine Bitcoin.
Of course, these values are all idealised; in reality, the wattage is higher and the average power is much lower. Also completely neglected are maintenance and, if necessary, repair of the miner, cooling and other necessary expenses. The pool fee is 1%.
Bitcoin Difficulty - Difficulties in Mining
The Mining Difficulty indicates how difficult it is to find a desired hash and is adjusted to the overall hash rate of the network.
The Mining Difficulty is therefore a component of the Proof-of-Work mechanism. It determines how much work must be invested on average to find a new block. If a valid hash is found, it is clear that the miner has invested the necessary work to mine a new Bitcoin block.
In bitcoin mining, miners try to find a special hash. At first glance, such a special hash stands out because it starts with a certain number of zeros.
However, the hash itself also has a value. The more zeros there are at the beginning of the hash, the lower its value. The difficulty is determined by the so-called target. The target indicates how small the hash of the block must be in order to be accepted as valid by the rest of the network.
Bitcoin Mining Taxes
According to the Ministry of Finance, Bitcoin mining is a commercial activity that creates another economic good. Accordingly, there are also taxes on bitcoin mining. Under income tax law, bitcoins are therefore to be treated as ordinary intangible assets.
Any income from Bitcoin mining is defined as income from the trade or business pursuant to Section 14 EstG if the following factors apply:
Should mining be classified as commercial income for the taxpayer within the meaning of § 15 EstG, this has tax consequences. Proceed as follows:
- One must register with the competent trade office
- Payment of trade tax in the case of natural persons or partnerships if the tax-free amount of € 24,500 is exceeded
- Derivative or original obligation to keep accounts.
In addition, in this case there must be no private asset management, self-employed activity or agriculture and forestry.
The result: How much can you expect to earn from Bitcoin mining?
If one now enters these values into a Bitcoin Mining Calculator, one finds that one can mine about 2.20€ in Bitcoin daily due to the output. If you extrapolate this, you need 1087 days alone until the Bitcoin miner has paid for itself. That is almost exactly 3 years!
And this is only if the Bitcoin price remains consistently high. In addition, the increase in mining difficulty and other cost factors are added on top. The calculation was extremely optimistic, but the mining earnings are still too low. Bitcoin mining is only worthwhile if the bitcoin price shoots up to unimaginable heights again. But no one knows today whether this will happen.
In the end, it is quite simple: Why should a company sell a Bitcoin miner when it could use it itself? Because it is worthwhile for the company.
Conclusion
Mining Bitcoin: The Conclusion
The purpose of this bitcoin mining review was to find out whether it is still worth investing in bitcoin mining today and becoming a bitcoin miner yourself. The answer is: No, if you mine solo. Both the high mining difficulty and the high competition make mining unprofitable today.
The high electricity costs that become necessary if one wants to mine further reduce a possible Bitcoin mining profit.
Mining in a pool or via a cloud miner, however, can still be extremely profitable. Especially with The Bitcoin Miner you can still make good profits.
It cannot be ruled out that the bitcoin price will break new records again, but even then it is probably better to obtain the coins directly via an online broker. This way, you benefit from any price increases, but you don't have to invest in your hardware to make mining possible.
The same applies to alternative cryptocurrencies. Bitcoin cash mining or bitcoin gold mining will not yield a suitable return today either. If you still want to invest your money in cryptocurrencies, there are countless alternatives.
CFD trading with derivatives on the popular coins is high-risk, but can lead to higher profits under certain circumstances.
Is mining worthwhile? That depends above all on the current price of the bitcoin. The higher it will rise in the future, the more profitable it is to invest. However, it is impossible to say when or if this will be the case. You should therefore look for Bitcoin mining alternatives like The Bitcoin Miner, or buy Bitcoins directly with our test winner broker eToro.
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FAQ
Bitcoin mining refers to the principle of making computing power available for the creation of so-called blocks. A block contains all the information that was created in a certain period of time through transactions with the Bitcoin. Every time a Bitcoin changes hands, this must be recorded so that the transactions remain traceable. Mining Bitcoin is therefore nothing more than an administrative activity that serves to secure the Bitcoin network. In return, the miner receives a part of the transaction fees. Each time a block (hash) is completed, new Bitcoins are also created, which accrue to the creator of the hash.
Mining pools are associations of many miners who divide the mined Bitcoins among themselves. Each individual Bitcoin miner is paid on the basis of the computing power they have invested. The largest pools include Antpool, Btc.com and Slushpool. Today, these three alone mine more than a third of all Bitcoins. If you want to start mining Bitcoin today, it is advisable to join a pool, as you hardly stand a chance on your own. To join a Bitcoin mining pool, you usually need software, which is provided by the various providers.
A hash is created through a mathematical process as soon as a block is completed. The miners' computing power is needed to create it. In return, they then receive a reward. The hash is there to encrypt all the information created by the Bitcoin trade, i.e. the block. Since parts of the previous hash (the block before it) are also included in the creation of the new hash, it not only verifies the authenticity of the current block, but also that of the previous one.
Today, Bitcoin mining is not worthwhile in the vast majority of cases. Meanwhile, the mining difficulty is very high, which makes it very unlikely to find new Bitcoins. At the same time, there are now a lot of interested parties in the pools, which reduces the expected Bitcoin mining profit. If you want to earn money with cryptocurrencies, you should fall back on other possibilities and not get into bitcoin mining.
