Is Bitcoin Mining Profitable In 2024? – Forbes Advisor INDIA

The combination of rising energy prices and falling cryptocurrency prices has made it much more difficult to turn a profit mining Bitcoin (BTC). The year 2023, BTC witnessed a recovery after a series of unpredictable events such as FTC fall, Terra Luna crash, macroeconomic conditions and Binance guilty plea. 

BTC rose an average of 0.39 in the month of July, 2023 and it showed immense recovery in the last months of the year, trading at around $38,000. As of Feb. 13, 2024, BTC hit the level of $50,107 for the first time since Dec. 2021 with a market capitalization of $982.72 billion. 

What Is Bitcoin Mining?

Bitcoin mining is the process by which Bitcoin is verified and recorded on the blockchain.

Bitcoin miners use powerful computers to complete complex mathematical functions called hashes. The processing power required to mine Bitcoin is extremely high, but Bitcoin miners receive 6.25 BTC in reward, roughly $143,000, for mining each block of transactions in the blockchain.

While anyone can technically mine Bitcoins, most Bitcoin mining is done by companies running large-scale commercial mining setups featuring data centers with specialized servers.

These mining farms are often built near affordable energy sources, such as hydroelectric dams, oil and gas wells or solar energy farms.

How Has Bitcoin Mining Profitability Changed Over Time?

Aspects of the Bitcoin mining business are similar to mining physical assets, like gold or silver. The higher asset prices rise, the more profitable mining becomes and the less efficient miners need to be to make money.

However, Chris Kline, co-founder and chief operating officer of Bitcoin IRA, notes that there are several factors to consider when it comes to Bitcoin mining profitability other than the price of Bitcoin itself.

“Alongside price, crypto mining profitability can be determined by a few different factors, notably rising electricity rates and increasing gas and energy prices, coupled with rising transactional prices,” Kline says.

Bitcoin mining requires nearly 139 terawatt-hours (TWh) of electricity per year, which is more than the annual energy consumption of Norway. The more expensive that electricity gets, the fewer profits miners can make. 

Despite the pressures of rising electricity prices and falling Bitcoin prices, there are at least a couple of trends that are moving in the right direction for Bitcoin miners.

Bitcoin Mining Equipment

The price of Bitcoin mining equipment is a major factor in profitability. The prices of top and mid-tier application-specific integrated circuit (ASIC) miners, the specialized chips made for Bitcoin mining, are reportedly down roughly 70% from their all-time highs in 2022 when units sold for around $10,000 to $18,000.

“GPU costs are rapidly decreasing, which translates to higher mining profitability,” Kline says.

In addition, Andy Long, CEO of cryptocurrency miner White Rock Management, says lower Bitcoin prices result in less efficient miners shutting down operations as they start to lose money. On the flip side, fewer total miners mean more efficient miners begin to earn more Bitcoin as prices fall.

“The genius of the system is that the difficulty mechanism automatically keeps block production running, with a new block every 10 minutes on average. So at lower prices, some miners will throw in the towel. But there will always be efficient miners with high-performance equipment that will keep securing the network,” Long says.

Bitcoin Network Hashrate

To mine Bitcoins, all the computers connected to the Bitcoin network are making millions of attempts at completing hashes every second of the day. A hashrate measures how many calculations can be performed per second, and this measurement can be by the billions, trillions, quadrillions, and even quintillions. One terahash, for instance, equals 1 trillion hashes per second.

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