For many investors, a key benchmark of how valuable the bitcoin is going to be on the market is the cost of mining the crypto. The cost depends on both intrinsic factors such as the cost of mining hardware and electricity costs as well as extrinsic factors such as geography.
Despite the increasing difficulty of mining bitcoins, the concentration of hashing power and diminishing returns, minting coins can still be profitable. If you’re an amateur miner looking to mine bitcoins, here are the costs involved in building a bitcoin mining rig.
- Hardware Costs
The primary hardware for the mining rig is a rudimentary rig frame to house all components of the mining system. Go for a metal rig frame as metal ones are more rigid when compared to their wood counterpart. They are not flammable and are a good conductor of electricity. The nice thing about rig frames is that there are plenty of options under $100. You’ll also need a motherboard. Gaming motherboards from top-tier manufacturers like MSI, Asus and Gigabyte are great options and their price range between $150 – $230. Other components you’ll need are a reasonably modern multicore CPU ($46), graphics card ($400), power supply and RAM and storage ($47).
- Software Costs
Bitcoin mining software is cheap. Most of them are free but there are others that go for prices that fit a wide variety of budgets. Free versions are great for those doing basic mining while the paid versions are suitable for miners looking to do something custom or mine on a huge scale that may require some code development.
Some of the best and most extensive bitcoin mining software to consider include CGMiner, BFGMiner, CCMiner, MultiMiner, BFGminer, and EasyMiner.
- Electricity Costs
The cost of mining bitcoin varies significantly from one country to another based on average electricity rates. The average cost for mining the crypto in the U.S. is $4,758 a bitcoin which is close to other popular mining destinations like Russia at $4,675 and Iceland at $4,746. This means investors can make a profit with bitcoin’s current value at $7,934.71.
To get an estimate of your daily electricity costs, you should be able to calculate your power consumption in kilowatt hour based on what your electricity supplier charges then add about 20kWh. If your electricity company charges more for a kilowatt an hour, your electricity costs will be high. To reduce your electricity costs, consider comparing energy prices using the Simply Switch energy comparison site to find a better energy supplier.
- Time to Profitability
Time to Profitability is a coined phrase that refers to the amount of time it takes a bitcoin miner to become profitable. You can calculate this amount by subtracting the electricity cost from your daily bitcoin earning. Then divide this figure with the total cost of hardware and software.
- That secret tip!
Due to the cryptocurrency boom, GPUs have become extremely hard to find at a normal price. A good example is AMD’s Vega 56 which is currently going for about $1,000 at retail stores, although its original MSRP is $400. To get the best price for a new GPU, buy directly from the manufacturer.
Building a custom bitcoin mining rig is no harder than building your own personal computer. Not only do you get to learn the ins and outs of the hardware, but you also save money over a prebuilt system. However, with price gouging on the rise, be sure to find the best deals, buy from the manufacturer and find pack deals to save on building costs.