Why Our “Cost of Production” for Bitcoin Miners Is Higher — and Why That’s More Honest
Most mining calculators only show a snapshot (today’s difficulty, today’s fees, a constant network hashrate). Our model projects the network hashrate into the future (based on the trend since the 2021 China ban), and it factors in halvings, realistic uptime, hosting, and CapEx amortization. As a result, the effective unit cost per BTC rises over time — often well above what looks “profitable today.”
1) The Problem with Snapshots
Many profit calculators assume:
- current difficulty = constant
- current electricity prices = constant
- 100% uptime, 0% curtailment
- halvings / hashrate growth ignored or heavily underestimated
Result: overly optimistic profits. In 12–36 months, yield per TH/s is usually much lower.
2) Our Core Idea: Model the Future Realistically
We make it transparent how miners perform over time, not just today. The core is our hashrate projection: we take the development since the China ban (summer 2021), measure a trend, and project the network hashrate forward. This shows how your share of the network (and thus your BTC output) shrinks as total hashrate rises.
3) Methodology (Assumptions & Structure)
3.1 Key Assumptions (all adjustable)
- Miner specs: hashrate (TH/s), efficiency (J/TH), power draw (kW), energy use (kWh)
- Uptime: % including maintenance/curtailment
- Energy price: cost per kWh
- Fees: variable items such as pool fees
- CapEx: machine price + shipping + duties/taxes + racking + installation − residual value
- Protocol: block subsidy and expected transaction-fee revenue per block
- Network hashrate: assumed to grow over time (trend-based)
- Blocks per day: ~144
3.2 Projecting Network Hashrate
For our forward projection we start right after the China ban. We use all data points from that moment to today to estimate the trend that underpins our projection.
3.3 Expected Mining Revenue per Day
- Own hashrate: your miner’s hashrate adjusted for uptime, stale shares, and invalid shares.
- Effective hashrate share: your adjusted hashrate divided by the network hashrate.
- Credited shares from the pool: effective hashrate adjusted for pool rejects.
- Gross revenue: credited shares × (block subsidy + average transaction fees).
- Pool fees: fees applied to the subsidy and, if applicable, to fees.
- Net after pool fees: gross revenue − pool fees.
- Final net payout: net after pool fees − payout/withdrawal fees.
Note: Block subsidy adjusts automatically at halvings; transaction fees are modeled as an average or median.
3.4 Cost of Production (Cumulative)
We use the cumulative daily results of the machine up to the end of the mining period.
- CoP — energy only: sum of energy costs ÷ sum of revenues
- CoP — including investment: (sum of energy costs + machine cost) ÷ sum of revenues
- CoP — including residual value: (sum of energy costs + machine cost − residual value) ÷ sum of revenues
This makes it clear how rising hashrate + halvings push up the unit cost per BTC over time.
Why Our CoP Is Higher — and More Realistic
- Hashrate drift: your network share shrinks over time → fewer BTC per TH/s.
- Halvings: subsidy steps down; fees don’t reliably compensate.
- Energy & hosting: prices aren’t fixed; we model escalation.
- Uptime ≠ 100%: maintenance, outages, curtailment cut real runtime.
- CapEx reality: machine price alone isn’t enough — shipping, taxes, racking, installation, and residual value matter.
- Pool fees & slippage: pools use very different fee models.
Together this yields a time-based, future-proof Cost of Production — not a marketing number.
FAQ
“Why is your CoP higher than provider X’s?”
Because we model the future: hashrate growth, halvings, real uptime, escalators, and full CapEx.
“Can I change the assumptions?”
Yes. On the product detail page you can adjust power price, uptime, fees, amortization, scenarios, and more.
“Is this anti-mining?”
No. It’s pro-transparency: better decisions, fewer disappointments.
If you’re considering buying mining hardware and hosting it, we’re happy to help you evaluate your options. We work with vetted companies that have been active in the market for years.