Bitcoin (BTC) mining is a fast-evolving sector and lucrative for miners with entrepreneurial spirits. As of 29 September 2023, Bitcoin miners’ revenue for the day was US$25.75 million, up 41.51% from US$18.19 million one year ago. But how much can you make daily as a solo Bitcoin miner? First, understand the inner workings of Bitcoin mining to get the most out of your investment.
What determines how much Bitcoin miners earn?
Bitcoin mining is like any other business venture. You have to invest and overcome several obstacles and challenges to earn a profit. Here are 5 factors that determine the earnings of Bitcoin miners:
- Hardware limitations: Today’s Bitcoin mining process requires specialized mining machines with enough computing power to solve complex math problems and validate Bitcoin blocks. The best ASIC miners, like Antminer L, S19J, and XP from Bitmain, cost between $1,950 and $5,100. The upfront investment can overwhelm some people. So, they opt for a cheap and inferior miner, which undercuts their competitive edge and earnings.
- Recurring costs: Bitcoin mining consumes a lot of electricity, which is expensive in some countries. Electricity bills can eat into miners’ daily earnings. However, miners can reduce this cost by using miner hosting. The best crypto mining hosting service providers charge $0.07/kWh, about 0.1/kWh lower than the average US electricity price of 0.17/kWh as of June 2023.
- Difficulty adjustment: The Bitcoin network uses a self-adjusting mechanism to control the hash rate and block production. It adjusts the Bitcoin mining difficulty to keep the production rate at 1 block every 10 minutes. This mechanism can influence how much Bitcoin a miner can mine and increase or reduce their daily earnings. As of 28 September 2023, Bitcoin’s average difficulty was 57.12T.
- Taxes: Bitcoin miners pay taxes on their mining profits like other businesses. However, the withheld amount varies depending on the applicable local tax regulations. Bitcoin miners can use crypto tax software to keep track of their gains after taxes.
How much can you make daily as a Bitcoin miner?
The number of Bitcoins entering circulation every 24 hours is 900. Technically, you can mine 900 BTC daily and earn US$24.3 million at US$27,005/Bitcoin as of 29 September 2023. But this is unrealistic because one miner can’t monopolize the Bitcoin network. Limitations imposed by the hash rate of ASIC miners dictate earnings. For example, Antminer S19 XP, with 140 TH/s hash rate and 3010 W power consumption, mines 0.00001284 BTC/hour and 0.00030816 BTC/day. It translates to US$8.27 in revenue daily. But miners use electricity to mine Bitcoin. ASIC miner hosting providers charge $0.06-$0.08/kWh. If you take out an average of $0.07/kWh for electricity from revenue, you’ll get $3.21 in profit daily.
A solo miner will need around 3000 mining rigs to accumulate the computational power to mine 1 Bitcoin. This venture will cost $6 million for 3000 Antminer S19J Pro+ miners at $2,000 each. The most practical option is to join a mining pool. But BTC mining pools charge members a fee. For example, a 2% membership fee will reduce the miner’s profit by $0.17 to $3.05/day.
The miner will make around $91.5/month and $1,113.25/year. However, this amount is just an estimation of Bitcoin mining earnings based on known elements. It doesn’t capture all the aspects and realities of Bitcoin mining. Large-scale companies, mining farms, and mining pools generate most Bitcoin mined today. Joining a mining pool is the only way solo miners can keep up with the competition. Some mining pools have over 10% hash rate share. They mine 90 BTC/day, or 10% of all mined Bitcoins daily. A miner can earn around 0.9 Bitcoin/day. In short, several factors influence how much a Bitcoin miner can make.
Several factors determine how much a Bitcoin miner can make daily, including hardware limitations, electricity usage and cost, difficulty adjustment, and taxes. The best Bitcoin mining hosting providers leverage economies of scale to offer affordable services to their clients. Miner hosting can help reduce your electricity costs, increasing your daily earnings. You’ll also need powerful hardware to keep up with the competition. You can buy crypto miners like Bitmain in Dubai. Ensure you get mining hardware and ASIC miner hosting from a trusted and reliable service provider.