Bitcoin mining: the software for calculating earnings
Bitcoin mining: the software for calculating earnings
Mining

Bitcoin mining: the software for calculating earnings

By Marco Cavicchioli - 13 Jul 2020

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There are pieces of software online that allow calculating possible earnings from the mining of bitcoin and other cryptocurrencies. 

One of the best known is WhatToMine.com, which allows users to calculate the potential earnings, or potential losses, of various cryptocurrencies. 

In particular, the website is divided into two sections, one dedicated to mining with GPUs, and one dedicated to mining with ASICs. It is precisely in this section that it is possible to simulate the results that can be obtained by mining Bitcoin with the SHA-256 algorithm. 

Three pieces of data in particular are required to perform these simulations: 

  • the computing power available to the miner, expressed in Gh/s, 
  • the electrical power of the ASIC expressed in Watts, 
  • the price of electricity expressed in $/kWh. 

The software will use the power to calculate the energy consumption, and the energy price to calculate the costs. 

It will then use the ASIC’s computing power to calculate possible income in BTC based on the total hashrate used worldwide at that specific time, and the current BTC price on various exchanges to calculate income in dollars. 

The difference between revenue and cost will determine the profit or loss. 

In reality, it is only an estimate, valid only at the time the calculation is made, and in particular it does not take into account depreciation or equipment rental costs. However, this calculation can be made by the users themselves on the basis of the price at which they purchased or rented the equipment. 

It should be borne in mind that these estimates tend to lose reliability over time. In fact, the mining industry evolves quite quickly, and after a few months, these estimates may no longer be true. It is therefore very difficult to calculate the real final net profits considering also the equipment maintenance costs, as the equipment tends to age quite quickly and will no longer be particularly competitive in a few months or at most a few years. 

Other Bitcoin mining software

CryptoCompare.com also includes simple software to calculate the profitability of bitcoin mining, with the ability to include the percentage retained from the pool used. 

Another software is BuyBitcoinWorldwide.com. This one in particular estimates an average daily increase of 0.4527678% of the hashrate, allowing to forecast the estimate of the profits over the next 12 months. 

However, these calculators are not only inaccurate, due to the fact that they can only assume estimates based on what has happened in the past, but they can also fail to take into account possible future hashrate developments

There is actually no alternative because it is not possible to proceed in any other way. Nevertheless, these estimates should not be regarded as 100% reliable. 

If anything, it is quite plausible that the actual situation will inevitably be different from what these estimates suggest, so it is best to use these instruments with some caution, perhaps maintaining a certain prudential margin when considering a mining project. 

Finally, it should be remembered that bitcoin can now be successfully mined only using ASICs and that these have a substantial cost. Moreover, they age very quickly, which means that used ones that can be purchased at much lower prices are not necessarily competitive. 

These machines consume a lot of electricity, and the older, less efficient ones have an undoubtedly less competitive performance/consumption ratio. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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