“How Much Does It Cost To Start Bitcoin Mining” is becoming a common question among crypto enthusiasts.
Now several factors determine the costs associated with bitcoin mining.
Continue reading as I lay out the main ones below.
Bitcoin mining is the process used to create and enter bitcoins into the crypto ecosystem. The cost of mining them includes the price of the electricity, the mining equipment; and the cost associated with where you are going to house your operation.
You see Bitcoin is a digital currency where a lot of computers work together to maintain all of its transactions on the blockchain (essentially a digital ledger).
Basically, bitcoin miners compete against each other with computers (mining rigs (CPU, GPU, and ASIC)) using cryptography to help create new bitcoins as well as verify and record these transactions.
In return for their contributions, miners receive some bitcoin as a reward.
However, these transactions can use a significant amount of electricity.
So when it comes to Bitcoin one of the main factors that determine the cost of creating it is the price of electricity.
Now according to Digiconomist, as of July 15, 2021, a single Bitcoin block requires 1,721.96 kWh or costs nearly $26,000.
As a little side note, all the crypto miners combined used more electricity in 2019 than the entire country of Switzerland.
In order to mine bitcoin or any other crypto, you’ll need what a lot of people in the crypto world call a mining rig.
You can buy a rig that has already been built.
Although more than likely it will cost more than if you build it yourself.
Now whatever rig you decide to go with it will build up a lot of heat and depending on how big you go, be pretty noisy.
So you will probably need to get a cooling device and maybe even a noise restrictor.
Also, you will want to buy or build a system that can operate 24 hours a day / 7 days a week.
Building your own system can come with a few different advantages.
The first being it will probably cost less than a pre-built one.
Second, by doing it yourself you should gain the knowledge needed to service it when something goes wrong and maintain it as well.
Third, if you buy one that has already been put together it probably won’t come with more than 2 GPUs (graphics processing units).
However, if you do it yourself it can be made to handle a whole lot more of them.
So if you go ahead and decide to build one it’s best to buy an open-air frame for your rig.
That way you can replace burned-out cards, get good ventilation, and perform the maintenance necessary for your system to stay in good working order.
Also, the minimum system requirements that you will need to mine bitcoin are a CPU, motherboard, graphics card, storage & ram, and a power supply.
One other thing you will need is software, but there are free versions of that.
Just make sure whatever software you get is compatible with the cryptocurrency you intend to mine.
Now when it comes to price, if you wanted to buy a mini rig you could get it for about $875.
However, if you did it would definitely be a hobby, because you would surely lose money mining with that.
To buy a halfway decent pre-built mining rig, you’re going to spend about $2,000 at least.
Although, if you build it yourself you can probably save a little money and get it exactly how you want it.
If you are going to mine bitcoin either as a hobby or in order to make a profit, you’ll need a place to house your equipment.
Unless you do cloud mining, but we’ll get to that a little later.
If you do intend to mine as a hobby you can probably get away with doing it in your garage or a bedroom.
However, if your plan involves trying to mine bitcoin for a profit, then you’ll generally need a very large dedicated space with adequate cooling capabilities.
This space will also need enough power coming in to handle all the machines and a heavy computational load.
If you’re going to be a miner, choosing whether to mine bitcoin or some other cryptocurrency should be the first thing you do.
This will point you in the direction that you need to go concerning most of your mining decisions.
Whatever crypto you choose will determine how much money you need to invest, the mining rig, and the software you need.
Some of the factors to keep in mind when deciding which crypto to mine are the cryptos value, block reward, competition, and hash difficulty.
There is a tool that can help people to make up their minds about the crypto they mine.
Here is a link (WhatToMine.com) to a mining calculator which is that tool.
If you have never used one it can seem a bit confusing.
I have to admit that I just stumbled upon it myself recently.
So sometime in the future, I’m going back over there to get it figured out.
Until then, feel free to go there yourself and see if you can get a jump on me.
Should you decide to become a miner you’re going to need a safe place to store your bitcoin (actually a private key).
Now when it comes to crypto wallets there are two kinds to choose from, cold and hot.
Basically, a cold wallet (also called a hardware wallet) is one that is not connected to the internet.
So, since they aren’t connected to the internet, they’re considered the safest option with the least risk of being compromised.
Hardware wallets allow you to store your public and private key offline and usually work in tandem with software that allows you to see your crypto portfolio without risking your private key.
You can generally buy cold wallets in the price range of $50 to $200.
One other thing, a lot of cold wallets are about the size of a small USB device.
So you can easily carry them in your pocket. Just be sure not to lose it.
Like cold wallets, hot wallets are also where you will store your public and private keys.
Although, unlike cold ones, hot wallets are connected to the internet.
Hot wallets seem to be some of the most popular wallets being used today.
The greatest benefit of a hot wallet is its convenience.
Since they’re always online you can conduct crypto transactions without having to go back and forth between being online and off.
Also, Hot wallets are usually free.
However, you trade a little bit of safety for probably no price for the wallet and the ease of use.
Bitcoin mining pools are groups of miners who work together to mine bitcoin blocks.
They then divide the bitcoin according to each miner's contribution.
The pool will have a coordinator and their fees will be paid from the bitcoin miners' profits.
The miners' contributions are measured in hash rate.
Hash rate is the number of hashes performed per second (attempts to find a new block per second).
Anytime a miner finds a block they give the reward to the coordinator.
The coordinator then splits it between all the miners in the pool according to their contributions after taking a fee.
Some people think being in a pool gives a small miner a greater chance of making it since the rewards will come more often.
Even taking into account that the rewards will be smaller.
This helps the small miner try to cover operating costs and maybe even make some profit along the way.
Cloud Mining is basically big data centers in which entities buy, operate, and manage mining equipment within them.
They then sell or lease hashing power to crypto miners.
The benefit of cloud mining is that you don’t have to pay high power bills.
Also, you don’t have to mess with buying equipment, mining maintenance, the loud noise, or the extreme heat that comes from crypto mining.
As far as pricing, on Genesis Mining there were packages starting at $499.99 for 24 Months of Ethereum Mining.
However, it looked like they were out of stock of everything. So, I don’t know what was going on there.
There are several factors to take into consideration when determining the cost of starting to mine bitcoins. First, you need to factor in the electricity expense, which as of July was about $26,000 a block. Then you have the mining equipment and that was approximately $2,000. After that, you need to consider the cost of housing the equipment if you’re not doing it in your actual house. Next, you’ll want to figure in the expense of a wallet, that is if you’re purchasing a cold wallet for the gig. So just with the electric and mining equipment costs alone that comes to about $28,000. On the other hand, I saw that cloud mining package for $499. However, it appeared that it might have been sold out. Now at the exact time, I’m writing this, bitcoin is at $43,481.45. However, I’m not saying that means that if you start mining bitcoin right now that you would be profitable. You should always do your own due diligence before you buy, sell, or invest in anything. Also, I don’t think anyone should spend more money than they can afford to lose when buying, selling, or investing in crypto or whatever it might be.