As Bitcoin’s price continues to rise recently we’ve been getting a lot of emails from people who are asking if it’s better to mine Bitcoins or to buy them. Last year, when Bitcoin was initially covered due to the crisis in Cyprus, many people took up the “hobby” of home mining. At that time (April 2013) it was still possible to generate a nice amount of Bitcoins through mining at home with your CPU or even a graphics card. But since then mining has become much more difficult and today it’s almost impossible to mine at home without investing a substantial amount of money.
The question remains – if you had $10K to invest in Bitcoins today, would it be better to just buy Bitcoins with this money or use it to get mining equipment and mine them.
So how much Bitcoins will $10K get you through exchanges?
Well if you’re going to buy Bitcoins that’s an easy answer. At today’s exchange rate you can get somewhere around 25BTC (I use CoinLlama to calculate the best possible price). So now the question remains can we beat this in the long run by mining.
Of course there is no simple answer to this since the question to is Bitcoin mining profitable depends on many variables such as electricity cost, the increase in mining difficulty etc. But for the purpose of this post I will assume that I live in Louisiana USA (this is the lowest cost per Kilowatt you can find in the US today).
Finding a good Bitcoin miner is quite the hassle
Since most of my money will be spent on my mining rig it’s important to choose wisely. The problem with many mining companies is that their products are out of stock most of the time and they create pre-orders, here is an example form KnCMiner. I don’t like this method since it’s just calling for trouble (e.g. Butterfly labs). After searching some more online I found this pretty powerful 2TH/s Bitcoin miner from Bitmain which seems to be in stock.
how many Bitcoins can I mine with $10K ?
Now I’ll head up to my Bitcoin mining calculator and drop in the numbers, the only problem is that there are 2 variables which I’ll have to guess. The first is how much will the Bitcoin mining difficulty increase over time. The second is what will be Bitcoin’s exchange rate once my money runs out. Fortunately since I’m only comparing mining to buying and not testing for overall profitability I have no need for the second variable – meaning, I only want to see if I can get more than 25 Bitcoins through mining.
I will used up $8750 to buy 7 Antminer S4-B2 miners. On checkout I can choose to host my miners in a hosting center in China. This is probably recommended since it will allow me to avoid storing and cooling the miners myself (they are very hot and loud). Another option would be to host and ship the miners directly to me. Seeing as the shipping costs would be ~$825 I may prefer to ship my miners directly to the hosting center (~$277 shipping cost). Even though the electricity cost in Louisiana (~$0.0977/KW/Hour) is lower than the hosting farm ($0.12/KW/Hour) I still prefer to ship the miners to the hosting center.
Total expenses up until now:
Miners – $8750
Shipping – $277
Hosting price per day – $4.587
Electricity cost – $0.12/KW/Hour = $2.88/KW/Day
So now that I’m all set it’s time to see how many Bitcoins I can get out of these babies. My daily expenses add up to $7.467 which mean I can run these miners for 130 days before I run out of money. I’ll put all of the variables into a Bitcoin mining profitability calculator and try to figure out how much BTC I’ll be able to generate.
The result….well it depends 🙂 since some variables need to be guessed different calculators will show different results. However NONE of the calculators I used showed that I will make more than 25BTC through mining. Most calculators suggested I’ll make around 23BTC (almost head to head with buying Bitcoins) and some suggested I’ll make as little as 10BTC. I can’t say which ones are more accurate since many guesses are taken into account with these calculators. Keep in mind that there’s also a time factor where you get the money 4.5 months after you’ve made your initial investment.
So who’s the winner ?
I guess if you’re looking at mining as a long term investment than perhaps it can generate you more coins in the long run but it’s also much more risky. First of all miners can break down, and even if you host them somewhere accidents do happens. Also there’s no way to know how high or low will the Bitcoin mining difficulty reach so numbers can change drastically. If you want an immediate winner than I’d definitely go with buying Bitcoins instead of mining them.
Keep in mind that this post was mainly theoretical and there’s a lot of hassle and unexpected events I didn’t take into account (shipping delays mainly), but it should give you an idea about what to take into account before jumping into Bitcoin mining.
Reading this in 2022 really hurts.
Imagine buying 25 BTC for $10,000 in 2021 😂👍 Currently 1 Bitcoin = $51,677.40
I was doing some research on the comparison recently.
Thank you for the overview, but I feel this article is very dated, especially for the crypto world. $10K for 25 Bitcoins? I wish 🙂
This article was written around November, 2014.
I would be interested to see if you did the comparison with current market price $11k+ per Bitcoin to see which one would be more profitable.
If done right, I believe mining would be as much as 3 times more profitable than buying Bitcoin to HODL now.
Hi thanks for the feedback, I assume you meant to write that the article is “outdated” and not “dated” – you’re right. We haven’t updated this in a long time. The “last updated” is actually changed whenever someone comments I think. It’s important to remember that there’s no actual “right” answer for this because of two variables which are unknown: 1. Bitcoin’s price and 2. Mining difficulty increase (which is also price dependant).
So while $12K now will get you 1 Bitcoin, mining equipment has also become more expensive and the difficulty has increased dramatically. So I’m not sure the general conditions actually changed.
IF done right (and that’s a big IF) I have no doubt mining can be profitable, since people are actually mining at the moment. But this requires a lot of budget for several rigs, the right infrastructure (for cooling and storage) and mainly very low electricity costs. It’s not just “let’s get a rig and start mining”. And in that sense, buying Bitcoin is an easier investment path.
I will try to revisit this article in the following months and change the data so it better reflects the current situation.
Not to split hairs, but “dated” and “outdated” are synonyms.
Thanks didn’t know that 🙂
dated means it’s still being used just older type or generation. outdated is something not used or usable anymore. it’s not synonyms.
I still dont understand how much i can.earn if i invest $10k for mining
Is it also good to buy bitcoins in regular interval like dollar cost averaging?
Sure, this is a reasonable method for building a position in Bitcoin. This method assumes that price is impossible to predict and therefore, by buying a set amount at a set interval (usually every month), one will get in at an average price. It’s logical and fairly conservative.
Right now, I couldn’t tell you if Bitcoin’s price has reached a peak or will continue upwards in a bull trend. By using the DCA method, you’re largely protected against any imminent price correction or crash. Of course, if price does continue upwards over the longer term, you won’t make as much profit using DCA.
How about doing both DCA and mining? Do you have review about Bitclub Network mining if profitable? I am not into recruiting but they also offer recruiting
DCA is dependable and simple but mining is a tough, complicated game! As a home miner, you’ll struggle to profit unless you’re wise or lucky enough to pick the right coins. Their price and difficulty both must work out in your favour and you’ll probably need cheap electricity to do well.
Mining will teach you a lot about crypto and you may find it a fun hobby if you enjoy technology. If you have a modern graphics card, try out mining some of the GPU coins and see how you get on. If you just have a CPU, I suggest that you try Monero mining. I’d say buying expensive new mining hardware is a bad idea unless you’ve really mastered the subject.
Ofir has written an extensive review of the Bit Club Network which will answer all your questions, check it out:
Do you have review on investing to Ethereum? Is it worth?
Nope, we don’t have a guide to Ethereum investment as yet.
It’s hard to answer your second question without more detail on your situation, timeframe, expectations and budget… That said, and keeping in mind that I’m primarily a Bitcoin guy, here’s my take on ETH:
Since August 2017, Ethereum’s price has been very stagnant around the $300 mark, while Bitcoin’s price has been soaring. However, Ethereum didn’t crash due to the recent Parity wallet hack. ETH seems very stable, in other words.
If you look at the chart, you can see that Ethereum is stabilising around $300, with up or down moves away from that mark decreasing in their range over time. I suspect one could fit a symmetrical triangle pattern to that price action. Check out this guide to triangles for clues on how to trade the action when price eventually breaks out, either to the up or downside:
It also appears that the ICO craze has peaked. The Ethereum devs have been talking about establishing rules against fraud and recklessness in ICOs. While this is a bit like closing the barn door after the horse has bolted, it’s still a welcome move.
Personally, I wouldn’t put much more than 10% of my crypto investment capital into Ethereum at this time.
Sounds like a good method, but, wouldn’t it be better if you wait for a pullback like when bitcoin reached 10,500 a few days ago then buy it all at once?
Well, the problem is you’re never sure where the bottom is when Bitcoin is crashing / pulling back. If you bought at $10,500, at the time you had no way of knowing whether it would bounce there or keep falling to an even lower level. DCA is a way to take out all this kind of guesswork.
I have investment of about 6 million dollars. Can I enter to mining as power cost is very low in India and I am planning to have contract with big ASIC comapnies. Suggest me can I go for mining or Trading.
Hi Dharani, before starting Bitcoin mining, I suggest you reading this article: https://99bitcoins.com/bitcoin-mining-profitable-beginners-explanation/
If you have 6 mils to invest, I guess you have a lot more in your bank, so, 1 more or 1 less for you, is like 1 dollar for me poor human, am I right? So why not gift away 1 million to me? A poor guy from Italy that want to study to reach dreams and instead of doing it, forced to work to earn low money per week, forgetting the dreams. I don’t really hope in this message, I don’t even know why I replied, I don’t even know where to put hope in those periods, have a nice day.
he is from india one of the most poor country on earth he is just bluffing …. to live your dreams align your effort
Forgive me If this is a stupid question but let’s say you went the mining route with the 10k USD you had to spend. After 10 months you would have mined 25 BTC. So isn’t it the same as you buying 25 BTC ? because you still keep all the appreciation bitcoin would have made in the span of 10 months. So isn’t is the same as you owning 25 BTC? So after 10 months it would be just like you bought 25 btc with 10k USD plus you get to keep whatever future BTCs the miners produce. Please correct my confusion anyone. Thanks.
Hi Nigel, it all depends on the price of the Bitcoin. It can happen you get your money back in less or more than 10 months.