Bitcoin Mining (Part 3): Calculation of Hash Power, Mining Machine Costs and Revenue

The first two articles on mining discussed the industry chain, business logic, related mathematical principles, hardware basics and a brief history of Bitcoin mining. Today’s article is the last of the three articles on Bitcoin mining. This chapter is about the most useful and informative topic: cost-benefit calculation.

Lead readers step by step to the core logic of the problem.

First, open the Btc.com website and there is a piece of content on the lower right.

Today, we will look at the total network computing power, which is 90.27 E at this point in time.

Take the most common high-computing mining machine as an example (Bitmain Ant S17+)

Parameters you need to know:

Computing power: 73T hash/s (usually abbreviated as T, the full name is T hash/s)

Power consumption: ≈3 kw

Electricity fee: 0.33 yuan/kWh

Total network computing power: 1000E hash/s

All of the above parameters can be changed:

For example: different mining machines have different computing power and power consumption.

The electricity fee for each miner is different, some are 0.2 yuan per kWh, some are 0.38 yuan per kWh. Judging from the price alone, thermal power and hydropower are different, and different time periods are also different. Looking at the whole year, 3.3 yuan per kWh is a fair figure, which is neither cheap nor expensive.

The total network computing power has also fluctuated and may increase in the future. However, our calculations below are based on the recent 93E total network computing power.

Let’s consider the most basic thing: how much profit can be earned in a day using 1T computing power.

Profit = Sales - Cost

The cost is mainly the electricity cost (one kilowatt-hour of electricity is 1kwh, and a 1kw machine consumes one kilowatt-hour of electricity when running for one hour), and the sales revenue is the value of the bitcoins mined every day.

Cost formula: 3kw x24h x 0.33÷73T = 0.325 Unit: Yuan per ton per day

Sales formula: 1T/ (93x10^6T) x 12.5 x 6 x 24h x50000= 0.9677 Unit: Yuan per ton per day

To briefly explain the above content, a 3-kilowatt machine running for 24 hours a day consumes several kilowatt-hours of electricity. Multiply it by 0.33 yuan, and you get the electricity bill for that much electricity. Divide it by 73T, and you get the electricity bill for one T a day.

1T computing power divided by the total network computing power 93E, the unit needs to be converted, 1E=10^6T, the current Bitcoin block reward is 12.5 coins, about ten minutes a block, one hour is equal to 6 ten minutes, so multiply by 6, and then multiply by 24 hours a day, we can get how many BTC can be mined with one T computing power in a day, and then the price of Bitcoin is approximately equal to 50,000 yuan per piece, so we can get how much the coins mined with one T computing power in a day are worth.

Profit formula: 0.9677-0.325=0.64 yuan

This is the money that 1T computing power earns in a day.

There is something interesting in the above content. In the cost formula, the electricity cost for one kilowatt-hour is 0.33 yuan. The cost per day is 0.325, which is approximately equal to one kilowatt-hour. Looking at the power consumption of a single T, 3kw/73T=41W, that is, when the power consumption of a single T is close to 40w, one T consumes one kilowatt-hour of electricity per day.

So for this 73T machine, the profit per day is: 0.64 x 73 = 46.7 yuan

If the total network computing power remains unchanged, the block reward (12.5 BTC) remains unchanged, and the price of Bitcoin remains unchanged, how long will the payback period be?

Assuming the price of this machine is 15330 yuan, 15330/46.7=328 days, which is 11 months, nearly a year.

After the Bitcoin halving in June next year, the 12.5 in the sales formula will become half, that is, 6.25. Then the income will be extended.

If the computing power of the entire network increases (no longer 93e but 100e, or 120e), that is, the denominator in the sales formula becomes larger, the number becomes smaller, and the profit decreases.

If the price of Bitcoin is no longer 50,000 per coin, the profit will increase if the price rises, and decrease if the price falls.

The so-called "cloud computing power" also uses the same algorithm. The essence of regular cloud computing companies is that they use mining machines to mine Bitcoin and obtain block rewards.

This article is to teach you the specific formula method for calculation. Of course, you can set the table formula according to your personal needs, and then change the parameters according to your needs.

The parameters that may vary are as follows:

1. Mining machine computing power

2. The computing power of the entire network

3. Power of mining machine

4. Cost per kilowatt-hour of electricity

5. Block Rewards

Based on the basic formula of the accounting method, more complex changes and calculations can be made according to needs. Readers can think about this carefully. Combined with the three articles on Bitcoin mining, you can strengthen your understanding of Bitcoin mining.