Bitcoin mining, what are the costs?

By Lumai Mubanga. [email protected]

Like any other business venture, bitcoin mining is an expensive enterprise. Unlike some exaggerate low cost projections some sections portray regarding this venture; you need to understand the operational costs of mining bitcoins. Whether you prefer to do it at home with an ASIC hardware or joining the mining pool, you need basic understanding of this lucrative business.

So what are the operational costs of mining bitcoins? Basically, there are three areas to take note.

• Energy Consumption
• Infrastructure and
• All Energy converted to heat.

Energy Consumption

The most expensive aspect of bitcoin mining is energy related. This is noticeable in three areas. The first area is in embedded energy. The production of all types of mining hardware requires that energy is expended. This is what is referred to as embedded energy. There are three major companies that manufacture bitcoin mining hardware devices namely Halong Mining, Bitmain and BitFury. They may all price this hardware differently but the cost of one hardware will tell us how much goes into the manufacturing of them.

As indicated above, the cost of manufacturing an Antiminer with hash power of about 14.0Th/s is $3000. Note that, besides the cost of the actual hardware, a substantial expense toward this is the cost of embedded energy.

Next is the cost electricity consumed to power the hardware. Take an example of a Dragonmint, the first ASCIC to hit the market by Halong Mining. At a Hashrate of 16TH/s, it can expend 1480 watts at a cost of 0.12KW/h. This is not cheap but a higher price to pay in terms of energy.

At this rate, it would cost about $2.88 to ran the hardware for 24Hrs. How about per week, per month?

The next area of power consumption is expended in the cooling process to maintain the hardware. Bitcoin mining involve huge production of Heat as a byproduct and to maintain them, they need to be constantly cooled. This too demands electric power consumption.

INFRASTRUCTURE

Mining demands a huge investment in infrastructure. This may include space and employees as well as power supplies that go with some types of miners. For example, a high quality 1600 Watt APW3 power supply unit is recommended for use with S7 Miner. Such overheads are a serious consideration when setting up a mining unit or farm. Sometimes, especially for long- term mining, old warehouses are purchase out rightly and converted to mining farms. Added to this may be extra power generating stations that would be used in case of power failure.

Setting up a personal mining unit or joining a mining pool is certainly a huge investment cost. With the rate at which technology is moving, who knows what the cost may be in the near future? Perhaps, more and more will find mining cheaper and profitable.