# Is Bitcoin Mining Worth It?

## Can you make a profit from making your own bitcoins?

Is bitcoin mining worth it? Many people dream of buying a miner, plugging it in, sitting back and watching the dough roll in. Sadly, it’s not that simple. Under some conditions, mining will be profitable. Under others, it won't.

When you’re trying to decide whether bitcoin mining is worthwhile, it all comes down to the cost of mining bitcoins, and the return that you can expect. Many people understand the return (you get bitcoins).

Fewer understand the different factors affecting the cost.

### The Power of the Miner

All miners on the bitcoin network are all racing to try and solve a mathematics puzzle so that they can earn a bitcoin prize. To win the puzzle, the miner tries thousands of calculations a second until it finds the right one.

The number of calculations that your miner can make each second is called its hash rate. The higher the hash rate, the more puzzles it will successfully solve, and the more bitcoins it will earn. Different miners have different hash rates, and you'll need to take your miner's hash rate into account when assessing profitability. Here's how to choose a bitcoin miner.

### Difficulty

The bitcoin network only wants to create new bitcoins every ten minutes, which means that it only wants someone to win that race every ten minutes. Yet as more miners try to solve the puzzle, the chance of someone solving the puzzle more quickly increases.

The bitcoin network adapts to this by making the puzzle harder to solve. It does this by adjusting a numerical value that is part of the puzzle, called the difficulty.

As more people try to mine for bitcoin, the more the difficulty rises, and the harder it is to solve the puzzle. Rising difficulty is bad for miners because it reduces their chance of winning the race.

It’s especially bad for people using slower mining equipment because they stand even less of a chance. This represents a cost because a higher difficulty reduces your probability of winning the race and therefore mining coins.

You can combat difficulty by using a more powerful miner, but this affects another parameter:

### The Initial Cost of the Miner

To buy more powerful miners, you’re going to have to spend more cash.

That shiny new ASIC mining box sitting under your desk may be the most powerful miner known to humankind, but it cost you a lot of money. Before you can make a profit, you have to make back the money that you just spent on the equipment.

### The Cost of the Electricity

It isn’t just buying the miner that you have to think about. You have to consider how much it costs to run, too. Miners work very hard to do their calculations, and that takes a lot of electricity to run. This means that you have to factor the electricity that your miner uses into the equation.

Typically, you’ll measure the energy used by the miner in watts. You’ll measure your own energy costs in the price to use a kilowatt of energy for an hour.

All of these things represent costs, and they all affect each other, which makes the calculation very tricky.

There’s only one factor underpinning the return, and that’s the price of bitcoins.

### The Price of Bitcoins

Bitcoin’s price fluctuates wildly, thanks to a variety of factors: government regulatory decisions, news about criminal activity, and even the bitcoin trading habits of ‘Bear Whales’ who hold lots of bitcoins and can move markets quickly.

If a bitcoin is worth \$1000 or more, as it was at the end of 2013, then bitcoin mining seems like a pretty profitable exercise, because you’ll need to generate fewer bitcoins to make your money. If the price drops to \$200, as it did a little over a year later, then it’ll take longer to mine your bitcoins, meaning that you’ll spend more on electricity.

### Calculating the Profitability of Mining

What this all boils down to is that if the return on bitcoin is worth more than the cost, then it’s worthwhile.

If the cost is greater than the return, then it isn’t.

Doing these calculations in your head might just make your ears bleed. Instead, there are several mining calculators online that let you input these parameters, and then give you a quick overview of how long your mining operation will take to begin returning a profit.

Even if you’re involved in a mining pool, you may find that your breakeven point is so far out that it makes mining unprofitable. An alternative might be a cloud mining contract, or you may want to consider mining an alternative cryptocurrency (commonly called an altcoin), or simply buying bitcoins directly, and trading them for profit.