Profit Analysis: How Much Does Crypto Mining Really Cost?

By Xianyue Wu

Just when you thought the cryptocurrency bear market couldn’t get worse, it has. The price of Bitcoin has fallen by nearly 40% in less than half a month. Miners are already deciding that it is no longer profitable to operate various mining machines. If this trend becomes a large-scale mining shutdown, it could lead to the collapse of the computing power needed to run the network, putting further pressure on Bitcoin’s price. That would be very bad for crypto investors.

So just what’s going on with miners? Here, we compare the three of the best Bitcoin mining machines in 2018 (Bitmain Antminer S9i, Halong Mining DragonMint T1, Whatsminer M3 Bitcoin Miner) to analyze the profitability of Bitcoin mining.

Here is the basic info on each mining machine:  


We got current prices of the above-mentioned miners from However, since miner prices follow Bitcoin price fluctuations, it’s likely that most miners’ hardware costs are much higher than what we’ve listed here, since they bought their hardware when Bitcoin’s price was much higher.

In the analysis below, we amortize the cost of the mining machine and factor in electricity prices each day to come up with a total daily mining cost and compare that to the revenue generated from mining BTC based on that day’s BTC to USD exchange rate and the total computing power on the network that day (which affects how much BTC is awarded to miners). In other words: we’re looking at the costs miners have to cover and comparing it to what they can make from mining each day to track how profitable Bitcoin mining was that day.

In the chart below, you can see our comparison between revenue (the rewards generated by mining, in purple), versus the cost of mining (orange). The blue line represents profitability, and you can see that in recent months it has dipped below zero (meaning miners are losing money), as revenues drop with BTC’s price but electricity costs remain steady. The same general pattern is observed across all three mining machines.


In these calculations, we’ve assumed a flat electricity cost of USD$0.05 per KWh. That’s based on the rate F2 mining pool co-founder Discus Fish recently told LongHash that miners are currently paying in his pool: 0.38 to 0.4 RMB per KWh, which is equivalent to roughly USD$0.05. In reality, mining electricity costs aren’t fixed, and on any given day they could be lower or higher. In the current dry season, prices may be unusually high, but we still feel our estimate is conservative considering that we’re only factoring in the basic hardware and electricity costs, and not factoring in additional costs miners must pay, including cooling, transportation as they move by the season to the region with the cheapest electricity, repairs, etc.

Our analysis suggests that many miners haven’t been making money for months, and are now losing enough money that it makes more sense to shut mining machines down. And that’s exactly what’s happening: Discus Fish told LongHash: “Across the network, 600,000 to 800,000 machines have shut down."

So what’s coming next? In the chart below, we compare Bitcoin’s price against the network’s total computing power. You can observe the apparent relationship; the network hash rate seems to follow the price, albeit after a significant delay. If that trend continues, then the recent drop in computing power we’ve seen on the Bitcoin network could be just the beginning.


Nobody knows what’s going to happen next, but the signs are not looking great for crypto investors hoping for a quick rebound.

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