Is mining Bitcoin still profitable at current prices? By some calculations, no. Energy costs per kWh vary widely state-by-state, from $.07 in North Dakota to $.17 in New York, and hobbyists mining at home may find the numbers discouraging. Yesterday afternoon, Bitcoin was trading at $2.23 when Betabeat checked in with Alex Spitzer, a developer for the New York-based recommendation engine Hunch, who has been mining for about a year and a half in Massachusetts, where the price is $.14 per kWh. He estimated that he mines about .35 BTC a day–so if the price stayed the same, it would take him more than 1,000 days to be profitable. If he didn’t have free power at a buddy’s office, that is.
“But if you were running it at home, it would definitely not be profitable,” he said. “Of course, the way BTC works is that the more people drop out, the easier it gets to mine again. So if everyone jumped ship, it could become profitable overnight.”
Mr. Spitzer’s machine takes three days to mine one Bitcoin, and currently has 60 BTC. “But at this point, I’ll probably just pick up the machine and bring it home for the kids to play on,” he said.
The profit margins for hobbyist miners are getting razor thin. But miners with faster rigs are still seeing enough return to be worth it, Bitcoiners told Betabeat–especially since most have already paid off their hardware costs and believe in the long-term viability of Bitcoin. There are also those like Mr. Spitzer, who have figured out ways to get cheap or free power, as well as savings gained by pool mining or using custom chips. The are also other calculations to consider, such as the ability to mine the variation Namecoin at the same time as BTC.
“Mining is still worth it, and probably will be worth it no matter how low the price seems to drop,” one Bitcoiner wrote Betabeat in an email. “This ‘sky is falling’ panic ignores the fundamental advantages of Bitcoins as a payment mechanism, and as a socially-empowering and democratizing force. The Open Source project itself has reached a critical threshold of developers, and it is now immortal. The same people who were using it when it was $0.01 are still going to be here even if it reverts to that price, and we’ll keep the lights on until everyone remembers what’s important: that the fiscal mismanagement of our money supply by our governments can be eliminated by taking back control of what is rightfully ours. Bitcoin, or something very much like it, isn’t going away. Bitcoin, or something like it, is the way by which we seize back control of our money supply.”
Bitcoin is currently trading at $2.56 on Mt. Gox, the largest Bitcoin exchange.