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Bitcoin Mining Insights

Mining Profitability & Cash Flow Calculator [User Guide]

Instructions explaining how to use the Advanced Options in our new Bitcoin mining profitability calculator in order to estimate cash flow for your mining operation.

Published on Nov 12, 2020
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Published on Nov 12, 2020

Table of Contents

There are dozens of Bitcoin mining profitability calculators out there that miners can use to make quick estimates about their margins. In fact, these mining tools have existed for almost as long as Bitcoin itself.

However, we’ve created a new Bitcoin profitability calculator which aims to provide far more customization for the many variables that go into a mining operation’s cash flow. Namely, we enable users to set advanced variables such as monthly Bitcoin price and difficulty increments, starting capital expenditure (CAPEX) and asset inventory values, asset appreciation or depreciation, additional fees and operating expenses, and more. 

In this quick guide, we’ll explain how to use these advanced options to make detailed projections of your cash flow from Bitcoin mining. These cash flow visualizations can be particularly useful for pitch decks if you are raising funds or just for yourself to get a better idea of how to best reinvest past profits into newer hardware.

Bitcoin Mining Profitability Calculator (Basic Options)

The basic version of our profitability calculator is what you’re likely already accustomed to seeing on other sites. The inputs are:

  • Total hash rate in TH/s
  • Total power consumption in Watts
  • All-in electricity price for mining
  • Pool fees (% of revenue)

You can also adjust Bitcoin price and difficulty if you wish, but these values are pulled from an API by default so they will always be up to date.

Once you put in your values for the inputs above, you’ll receive the following information about your operation:

  • Monthly revenue in BTC and total BTC mined over the full time period
  • Monthly profit or loss in USD (or other fiat currency)
  • Cumulative profit or loss in USD over your selected time period
  • Your break-even electricity price given your hashrate, consumption, and pool fee
  • Your average cost of production for 1 BTC over your selected time period

But to really make the most of this tool, we recommend using the advanced options.

Bitcoin Mining Cash Flow Calculator (Advanced Options)

The advanced version of our mining profitability calculator gives you a much more sophisticated overview of how your mining business will perform in different scenarios. Let’s explain the custom options one-by-one.

Avg. Transaction Fees Per Block (BTC)

One variable that fluctuates significantly and impacts miner revenue is the average transaction fees per block. Of course, transaction fees as a percentage of total miner revenue are trending up with each halving as the block subsidy decreasing. For now it remains just a small percentage of the total BTC mining revenue, but it is high enough to offset expenses such as pool and dev fees. We have set this to zero by default since it’s unpredictable, but we recommend looking at recent block values and estimating conservatively based on that information.

Time Period

In case you want to see projections for a time period other than the default (12 months), you can change this variable to anything in the range of 6 months to 4 years.

Other Fees (%)

Pool fees aren’t the only fees and operational expenses that miners pay. With the Other Fees input, you can factor in additional costs such as downtime of your ASICs. This is typically about 1-2% for general maintenance, but it can be much higher if you only run your machines at certain times of day due to climate. Other possible expenses include dev fees for performance-boosting firmware like Braiins OS+ or a management system for your farm. And, of course, there’s always those dreaded taxes that will vary widely depending on the location and scale of your mining operation.

Price and Difficulty Increments (%)

Most profitability calculators show you revenue and profit for a static BTC price and network difficulty. This can still be useful of course, but it’s not at all realistic. Even if price remains relatively steady, there are always some miners with wider margins that can continue to scale and squeeze out their competition. 

This means that difficulty will almost always increase over long time periods as long as price doesn’t drop significantly.

Source: CoinMetrics

Both of these increments are MONTHLY, meaning that the difficulty increment in the cash flow calculator accounts for a bit more than two actual Bitcoin difficulty adjustments each time. Note that for difficulty to approximately double over the course of 1 year — as it has historically done in the last few years — the monthly difficulty increment should be set at about 6%.

Price is relatively harder to predict, so we recommend playing around with different bullish and bearish scenarios. For example, project what would happen by increasing price faster than difficulty (as occurs in bull markets) or increasing it slower than difficulty (as occurs in sideways movements or bear markets).

Capital Expenditure (CAPEX)

Capital expenditures are costs you pay to acquire or upgrade your business’ assets. In Bitcoin mining, examples of CAPEX include:

  • Purchasing ASICs and PSUs
  • Building or purchasing a data center facility to house your hardware
  • Immersion cooling or HVAC setup
  • Labor for installation and maintenance
  • Taxes and licenses to be legally compliant

If you have fixed monthly costs that are independent of your mining revenue, you can also factor those in here. For example, if you pay $1000 per month for insurance and security, you could simply multiply that $1000 by the time period you are projecting for and add that to your initial CAPEX. 

Starting Assets

The Starting Assets input should be the present estimated value of any assets you own that can be resold on a secondary market. For instance, once you’ve purchased ASICs, they are now assets on your balance sheet that impact your cash flow because they can always be sold as long as they are still in good condition. This input is the initial data point for the Net Inventory Value line on the chart.

Asset Appreciation / Depreciation (%)

Historically, the value of ASIC hardware is highly dependent on Bitcoin’s price (and the price of all SHA-256 coins including Bitcoin Cash and Bitcoin SV as well). At the same time, ASICs become less valuable when newer and more efficient models reach the market. Antminer S9s that were originally selling for $2000 - $3000 in 2016 were available for $20 - $50 after the 2020 halving

If you calculate mining cash flow for 6 - 24 months, price should be the main variable that determines the change in value of your assets. On the other hand, increasing difficulty and newer ASICs hitting the market should be the main factors that contribute to depreciation over longer time periods. 

Projecting Possible Scenarios

Finally, we’ll leave you with an example of how you can use the Bitcoin mining cash flow calculator to better understand the impact of various decisions you might make about your mining operation.

You can view the changelog also in our documentation.
See the full changelog

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About Braiins

Operators of Slush Pool. Creators of Braiins OS+ autotuning firmware & a fully open-source mining stack: Braiins OS + BOSminer + Stratum V2.

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