Bitcoin mining is the process of earning bitcoin in exchange for running the verification process to validate bitcoin transactions. These transactions provide security for the Bitcoin network which in turn compensates miners by giving them bitcoins. Miners can profit if the price of bitcoins exceeds the cost to mine. With recent changes in technology and the creation of professional mining centers with enormous computing power, as well as the shifting price of bitcoin itself, many individual miners are asking themselves, is bitcoin mining still profitable? 


Key Takeaways

  • Bitcoin is mined using computing rigs which include expensive hardware.
  • Miners are rewarded with bitcoin for verifying blocks of transactions to the blockchain network.
  • As more miners compete for bitcoin rewards, the process becomes more difficult.
  • To determine whether bitcoin mining is profitable for you, consider costs of equipment and electricity as well as the difficulty associated with mining and how the price of bitcoin will impact potential rewards.

The Components of Bitcoin Mining

Prior to the advent of new bitcoin mining software in 2013, mining was generally done on personal computers. But the introduction of application specific integrated circuit chips (ASIC) offered up to 100x the capability of older personal machines, rendering the use of personal computing to mine bitcoins inefficient and obsolete. While bitcoin mining is still theoretically possible with older hardware, there is little question that it is not a profitable venture. This is because of the way that mining is set up: miners are competing to solve hash problems as quickly as possible, so those miners at a serious computational disadvantage essentially stand no chance of solving a problem first and being rewarded with bitcoin. When miners used the old machines, the difficulty in mining bitcoins was roughly in line with the price of bitcoins. But with these new machines came issues related to both the high cost to obtain and run the new equipment and the lack of availability.

Profitability Before and After ASIC


After ASICs came into play, the game changed. Individuals were now competing against powerful mining rigs that had more computing power. Mining profits were getting chipped away by expenses like purchasing new computing equipment, paying higher energy costs for running the new equipment, and the continued difficulty in mining.

Difficulty of Mining Bitcoin

As discussed above, the difficulty rate associated with mining bitcoin is variable and changes roughly every two weeks in order to maintain a stable production of verified blocks for the blockchain (and, in turn, bitcoins introduced into circulation). The higher the difficulty rate, the less likely that an individual miner is to successfully be able to solve the hash problem and earn bitcoin. In recent years, the mining difficulty rate has skyrocketed. When bitcoin was first launched, the difficulty was 1. As of November 2019, it is more than 13 trillion. This provides an idea of just how many times more difficult it is to mine for bitcoin now than it was a decade ago.

Shifting Rewards

The Bitcoin network will be capped at 21 million total bitcoin. This has been a key stipulation of the entire ecosystem since it was founded, and the limit is put in place to attempt to control for supply of the cryptocurrency. Currently, about 18 million bitcoin have been mined. As a way of controlling the introduction of new bitcoin into circulation, the network protocol halves the number of bitcoin rewarded to miners for successfully completing a block about every four years. Initially, the number of bitcoin a miner received was 50. In 2012, this number was halved and the reward became 25. In 2016, it halved again to 12.5, the current reward. Around 2020, the reward will halve once again. Prospective miners should be aware that the reward size will decrease into the future, even as difficulty is liable to increase.

Profitability in Today’s Environment

Bitcoin mining can still make sense and be profitable for some individuals. Equipment is more easily obtained, although competitive ASICs cost anywhere from a few hundred dollars up to about $10,000. In an effort to stay competitive, some machines have adapted. For example, some hardware allows users to alter settings to lower energy requirements, thus lowering overall costs. Prospective miners should perform a cost/benefit analysis to understand their breakeven price before making the fixed-cost purchases of the equipment. The variables needed to make this calculation are:


There are several web-based profitability calculators, such as the one provided by CryptoCompare, that would-be miners can use to analyze the cost/benefit equation of bitcoin mining. Profitability calculators differ slightly and some are more complex than others.

Run your analysis several times using different price levels for both the cost of power and value of bitcoins. Also, change the level of difficulty to see how that impacts the analysis. Determine at what price level bitcoin mining becomes profitable for you—that is your breakeven price. As of November 2019, the price of bitcoin is hovering around $9,000. Given a current reward of 12.5 BTC for a completed block, miners are rewarded around $112,500 for successfully completing a hash. Of course, as the price of bitcoin is highly variable, this reward figure is likely to change.

To compete against the mining mega centers, individuals can join a mining pool, which is a group of miners who work together and share the rewards. This can increase the speed and reduce the difficulty in mining, putting profitability in reach. As difficulty and cost have increased, more and more individual miners have opted to participate in a pool. While the overall reward decreases because it is shared among multiple participants, the combined computing power means that mining pools stand a much greater chance of actually completing a hashing problem first and receiving a reward in the first place.
