Is Bitcoin mining profitable?

Many things have changed since Satoshi Nakamoto mined the first Bitcoin block on January 3, 2009. 

Nowadays, mining has become a much more serious and complex endeavor, so it makes perfect sense to question whether it is still a profitable activity. 

To answer this question, however, the response needs to be divided into three parts, each addressing a different scenario. 

The Bitcoin Mining Reward

Initially, in 2009, Bitcoin mining was conducted in a single way, using a single software. 

At the time, mining BTC was very simple, although in reality, they had a market value literally equal to zero. 

However, when BTC began to have a market value (i.e., a price), things started to change. 

In 2010, when it was first possible to trade it on a public exchange, its value was approximately $0.06 per BTC, and since 50 were awarded as a reward for each mined block, that reward was worth about $3. 

The following year, however, it surpassed $1, and then even $10. At that point, the reward for each mined block rose above $500 in value. 

In November 2012, the first halving occurred, which reduced the reward to 25 BTC per block, but in 2013 the price of Bitcoin exceeded $1,000. At that point, mining a block meant taking home a market value reward of over $25,000.

Although in the following two years the price dropped to $200, and in 2016 there was the second halving which reduced the reward to 12.5 BTC per block, in 2017 the price skyrocketed to nearly $20,000, bringing the market value of the reward to almost $250,000 per block. 

By that point, things had already changed, primarily due to the fact that Bitcoin mining is a competition.

The Three Methodologies

When the market value for the reward at stake for successfully mining a block began to soar, more and more companies started engaging in Bitcoin mining as their primary business activity. 

Initially, anyone with any computer could mine a block, but when professional miners entered the scene, everything changed completely. 

The point is that the mining of each individual block—there is a new block to be mined approximately every 10 minutes—is a competition where only the single miner who mines it collects the entire reward. Moreover, this is a competition based on computing power, where generally the one with the most power wins.

In other words, large-scale professional facilities are significantly favored because they are much more powerful than home setups and far more efficient. 

However, over time, the so-called pools have also emerged, which are software platforms that combine the computing power of various miners, subsequently distributing any potential reward proportionally to all their users based on the actual computing power provided. 

This way, two mining methodologies become possible: solo mining, to try to win the entire reward, or pool mining, to maximize the chances of successfully mining at least one block. 

The first methodology, which is also Satoshi’s original one, nowadays only works if you have excessive computing power, while the second can be done with lower computing power (although not by much) but guarantees lower revenues. 

The third method, however, should be approached with caution. It is the so-called cloud mining, which involves renting computing power provided by third parties. Unfortunately, those who appear to offer this service often deceive, with the sole aim of scamming the unsuspecting, but it should still be considered because it does indeed exist. 

First Methodology

The first method one can follow for Bitcoin mining is the original one, which involves solo mining with one’s own setup. 

To determine whether it can be a profitable activity or not, it is essential to clearly explain what it entails. 

Since mining is a competition where only those who manage to extract the correct hash take home the entire reward offered for each individual block, to do this profitably, one must be able to extract at least one or more hashes that validate the blocks. 

The problem is that it is a competition where typically the winner is the one with greater computing power, making it practically impossible for small home setups to compete. 

For example, the company Mara Holdings, which is the largest Bitcoin mining company in the world, is currently estimated to have between 50 and 60 EH/s of operational computing power. A Bitcoin mining machine with a computing power of approximately 600 TH/s costs around $18,000. Since 1 EH/s equals one million TH/s, this means Mara should have more than 80,000 such machines, likely costing a total of over one and a half billion dollars. 

The company manages to mine approximately ten blocks per day, thus securing an average daily revenue of about 31.25 BTC. With a market value of around $80,000 per BTC, Mara’s estimated average daily revenue at this time would be approximately 2.5 million dollars, equivalent to over 900 million dollars annually. 

However, from these, one must deduct not only the expenses for purchasing the machines (or, more precisely, their annual depreciation cost), but especially the expenses for the enormous amount of electricity consumed. 

For example, in 2024, the last year for which official data is available, Mara earned a total of approximately 650 million dollars, with a final net profit of 540 million after expenses. 

Therefore, large-scale industrial Bitcoin mining proves to be profitable, provided one can invest substantial amounts of money, and of course, manage their facilities very well. 

The Second Methodology

The second method, theoretically accessible to everyone (or almost), would be mining in a pool. 

In this case, even with computing power significantly lower than Mara’s, results can be achieved, but not with minimal computing power.

It must be said that nowadays, with a simple computer, let alone a smartphone, it is impossible to mine anything, because the power is so low that the compensation one can receive from participating in a pool is almost negligible. 

In fact, nowadays mining can effectively be done only with ASICs, which are machines specifically designed, built, and optimized solely for mining.

Among the most affordable on the market, there are those with 300 TH/s, costing less than $5,000 per machine. 

With a recent estimate, one can assume a revenue of about $10 per day with a similar setup, but there is a risk that the electricity cost could be around $8 per day. 

Therefore, if all goes well, one can earn $2 gross per day, which amounts to just under $800 gross annually. 

At this point, it becomes evident that this type of mining is not actually profitable, as it would take more than five years just to recoup the cost of the machine. 

In these cases, only by achieving economies of scale to reduce operating expenses and increase gross revenues, can one envision making Bitcoin mining profitable. However, even in this scenario, such skills and expertise are required that only professionals can realistically succeed. 

The Third Methodology

Cloud mining is actually strongly discouraged. 

First of all, it is often just a scam, as many offers circulating do not even come from mining companies, but only from fraudsters aiming to get money sent to them. 

Moreover, even in the very rare cases where it is actually possible to rent computing power, one must be skilled and knowledgeable to optimally configure the miners to make them profitable. 

Moreover, cloud mining faces a very serious issue: the cost of electricity. 

With your own setup, you can choose, for example, to consume electricity only during times of the day when it costs less, or perhaps power the miners with energy obtained at a very low cost. You can also decide not to mine at all if you cannot secure low-cost electricity. 

However, with cloud mining, there is no possible choice of energy supply sources, as there is no physical access to the facility. In other words, it is impossible to work on optimizing expenses because it is the facility manager who selects the sources, not the user. 

The overall scenario just described is disappointing, but it has been well-known for years that Bitcoin mining is now exclusively for specialized companies, and certainly not for small private users.