How much money can you make from Bitcoin mining?
14 November 2020
The eyes of the world are back on the digital currency bitcoin, and with prices currently enjoying giddy highs, many of us are wondering whether it’s time to take the plunge and get involved. But there’s a problem: with prices rising, buying bitcoin is getting more expensive by the day, so is there a way to get involved in the sector without extensive knowledge and at a sensible price? And if there is a way to get involved, how much money can you expect to make?
Bitcoin mining offers a more stable way to take part in this increasingly important part of the global digital economy without having to find a way to become involved in trading crypto-currencies directly. It’s an investment in the infrastructure that supports the Bitcoin Network and offers access to stable, consistent returns.
What is Bitcoin Mining?
Without getting too far into the technicalities, cryptocurrencies such as bitcoin run on blockchains, which are decentralised global stores of information that are not managed by any central authority. Instead, the information is stored and compared across multiple of locations, making it virtually impossible to cheat because if the data is becomes corrupted in one place, it will no longer marry-up with the information stored at all the other places.
The keys to these stores of information are computer-generated formulas. If you can solve the formula, which is also known as a "hash", you have validated one of the stores of information and you are rewarded with a proportion of a bitcoin. This is known as Bitcoin Mining. The owner of an individual bitcoin is recorded on these blockchains, with the data updated globally as the coins are spent or transferred.
The value of the reward rises alongside the value of the cryptocurrency, and the difficulty of the formula or hash is adjusted according to the number of people trying to crack the formula. This is known as the "hash rate". The more people chasing the reward, higher the hash rate becomes, which keeps the intrinsic value of the coin stable without stopping its market value from fluctuating.
When bitcoin first started, it was possible for certain, admittedly technically-minded, people to use a home set-up to make a reasonable return from bitcoin mining. As time has gone on and the formulas have become more difficult, dedicated data centres have become the best way to make a return from bitcoin mining.
The next generation of challenge
So far so good, but the problem now is that these dedicated bitcoin mining data centres have a voracious appetite for power. And power is not cheap and its price can fluctuate, which can have a significant impact on the profitability of a bitcoin mining project.
Separately, over in the oil and gas sector, there’s an increasing problem with wasted natural gas. Particularly with smaller projects, the gas that accompanies an oil deposit can be too small to be shipped cost-effectively to market. It’s cheaper to release the gas into the atmosphere, burn it off, or push it back into the ground, but this is both environmentally damaging and represents a significant financial opportunity cost.
So bitcoin miners need consistent, cost-efficient power, and the oil and gas sector is wasting energy because it’s too expensive to shift to market.
PermianChain brings these two issues together, placing bitcoin mining servers on-site at an oil and gas extraction project and powering them with gas that would otherwise be wasted at the point that it comes out of the ground. We then provide access to the power and the servers to bitcoin mining projects.
What does this mean from an investment perspective?
Larger operations that are comfortable with the process and comfortable committing the resources can purchase bitcoin mining hardware through us and have it placed at one of our growing number of global sites. They can then manage their rewards through the PermianChain platform.
By offering access to bitcoin mining operations, we are creating an opportunity for investors of all sizes to take a simple, controlled stake in the crypto sector that can offer consistent returns with less of the risk that is usually associated with manually trading currency, and their power costs will be much lower.
It’s also worth pointing out that because the utility of blockchains goes far beyond cryptocurrencies themselves, it seems likely that there will be constant demand for digital-asset mining centres even if currency prices fluctuate.
So how much can you make from bitcoin mining?
Which brings us back to the question of how much money can one make from bitcoin mining? When trying to calculate the profitability of a bitcoin mining project, you need to take several factors into account including:
1. Hash rate
2. Electricity cost
3. Power consumption
4. Pool fees
5. Bitcoin price
6. Bitcoin reward per block
7. Mining difficulty rate
We’ve developed a bitcoin mining calculator
that can give you a realistic gauge on the returns you might hope to enjoy each day, month and year from involvement in the sector.
The long and the short of it is that we are offering an opportunity diversify an investment portfolio into an exciting and growing sector for as little as the cost of a mobile phone.
PermianChain is a proprietary technology platform that brings together the crypto-mining and oil and gas sectors. Using a permissioned access blockchain, PermianChain makes it possible to utilise stranded and wasted energy resources, unlocking liquidity and transforming the way that oil and gas projects are funded, produced, bought and sold. Established in 2018, PermianChain Technologies is a pioneer member of the Blockchain Research Institute (BRI) and start-up member of the Petroleum Technology Alliance Canada (PTAC).