BTC’s key features is its hard-capped finite supply at 21 million bitcoin. This distinguishes the flagship cryptocurrency from traditional fiat currency, making it by nature a deflationary currency. Instead bitcoin is sustained by a network of miners who are compensated in block rewards, making crypto calculators a crucial tool.
Mining bitcoin used to be a fairly simple process, where a computer is used to solve complex algorithms in return for bitcoin rewards.
But the process is becoming increasingly complicated, with bitcoin now being mined on industrial scale, making it impossible for small scale miners to compete.
It is consequently a good idea to understand what your likely profits will be before you begin mining bitcoin.
A bitcoin mining calculator will help to provide the answer.
How to use a bitcoin mining calculator:
An wide range of bitcoin mining calculators can be found online.
Several parameters need to be entered, and the more information provide, the more accurate the prediction will be. The information you can enter includes:
The hash rate of your bitcoin mining hardware (usually measured in GigaHashes per second. The higher the hash rate, the faster it can mine bitcoin).
The amount of power your miner consumes (take your mining hardware’s hash rate and divide it by its power consumption, this will give you an indication of how efficient it is.)
Power costs (the lower the price of your electricity, the more profitable your mining operation will be).
Pool fees (if you are in a bitcoin mining pool, it probably charges a small percentage-based fee).
Pre-filled bitcoin calculator information:
The bitcoin calculator has some pre-filled sections, which are continually updated. These include:
Bitcoin’s current stock price – the higher it is, the more profitable mining can be.
Bitcoin block reward – this is halved roughly every four years. It is currently 12.5 bitcoins per block and this will automatically fall to 6.25 next year.
Mining difficulty – it gets harder to mine Bitcoin as more miners join the network, in order to manage inflation.
How to calculate the results:
Once all your mining information has been entered, simply select Calculate” and the results will automatically appear.
Some calculators will show your likely profits on an hourly, daily, weekly, monthly and even annual basis.
Although certain values are pre-entered, such as the current Bitcoin price, some calculators let you change these to predict potential future scenarios.
Always remember bitcoin price and mining difficulty can rapidly fluctuate, meaning it is important to ensure calculations are kept up-to-date.
And fresh calculations are required every time electricity costs change.
Additionally, some calculators do not factor in upfront costs such as the price of your mining equipment moving.
Setting up a proper mining rig with multiple ASIC miners can cost thousands.
This and a myriad of other factors mean it can take months or even years to break even on your initial investment.