Although experts claim that current costs of mining Bitcoin rival the value of each Bitcoin itself, some methods and locations make mining a more feasible way to obtain the currency than trading or purchasing it. Before picking a location and Bitcoin mining rig, however, it’s important to understand how the process works and why Bitcoin is so costly. Bitcoin is the costliest cryptocurrency, but with at least 39 percent of Americans open to using it for transactions and purchases, it just might be the future of currency in the United States and beyond.
How Much Does It Cost to Mine Bitcoin by State?
The following table breaks down the cost of electricity per one Bitcoin according to the cost of power of each of our three mining rigs. We’re including all 50 states plus Washington DC. Also, we’ve calculated the averages of all three of these rigs to give a better overall picture of what you can expect regardless of the type of mining rig you purchase.
Electricity costs are arranged from lowest to highest, highlighting the amounts that are low enough to warrant mining for Bitcoin as a means of cash-value trade. Some states have surprisingly low electricity rates, while others are exorbitantly high to the point that it doesn’t make much sense to mine for Bitcoin in those locations.
Following is a discussion of the top ten performing states, as well as ten to avoid if you’re hoping for a return on electricity investment.
|Number||State||Electricity Cost (cents per kWh)||Total cost per Bitcoin for Bitmain AntMiner S9||Total cost per Bitcoin for Bitmain AntMiner T9||Total cost per Bitcoin Bitmain AntMiner S7||Average of all three rigs|
10 Best States for Bitcoin Mining
Although there are places in the world where Bitcoin mining is even less expensive with regard to electricity costs, the United States does offer low-cost electricity in many states. Overall, the United States ranks 41st in the running for cheapest electricity. Here are the states that have lowest electricity costs.
With the cheapest electricity in the country, Louisiana is an ideal location for Bitcoin mining. And while the rates are cheaper than anywhere else in the US, residents of Louisiana consume the most electricity. On average, people use about 1,254 kilowatt-hours per month. Although rates are cheap, you’ll want the most efficient rig to make the best use of your electric costs.
Next in line, Washington also boasts low electricity rates overall. At a cost of just over $500 for each Bitcoin, mining in Washington can earn profits of close to $7000 per month at current rates. While it doesn’t compare with some other countries in the world, this cost-benefit analysis shows that it may be worthwhile to mine in Washington.
However, the efficiency of your rig will factor in here, too. The Bitmain AntMiner T9, for example, will still run you $6,687.03 in operating costs. That comes out to just over a thousand dollars’ profit for a single Bitcoin, but that payoff may be almost seven months out.
At 10.1 cents per kilowatt-hour, Connecticut ties with Idaho for the next affordable electric rates. However, as higher fees apply to cryptocurrency transactions, Connecticut is one state that has concerns about Bitcoin’s future.
One lawmaker introduced a bill in early 2018 that would impose fees on cryptocurrency transactions. While that wouldn’t affect the cost of mining Bitcoin, it could impact a miner’s ability to sell or trade their currency.
It matches the low rates of Connecticut, so Idaho ranks in the top ten as well. And while one teen made headlines for making over a million dollars off a $1,000 investment in Bitcoin, it may take time for new investors to reap similar benefits.
Even with our second choice in terms of mining rigs, you can still see the benefits of mining for Bitcoin with Arkansas’ electric rates. Each Bitcoin costs about $708 in electricity to mine, meaning you’re still making a substantial profit if you decide to sell your stock immediately.
Differences in mining rigs widen the gap, but with either of our top two machines, Oklahoma’s 10.3 cents per kilowatt-hour charge for electricity isn’t a bad deal. Few restrictions on selling and trading in Bitcoin in Oklahoma also make the state an ideal location for cryptocurrency ATMs and services.
At 10.55 cents per kilowatt-hour, Kentucky easily makes the list of best Bitcoin mining states. One resident there invested in Bitcoin and made over $770,000 from his foray into cryptocurrency. While there are no guarantees that any one miner will strike it rich, there is always the potential- and low energy costs make it easier to invest.
Even with the least efficient rig, you can expect to spend a relatively low $1,633.28 for each Bitcoin. Plus, with the fluctuation in the value of the currency, it’s possible that the net worth of your investment may grow substantially.
Even with our second choice rig of the T9, one Bitcoin tops out at barely $750 in electricity, a tremendous return on investment.
At 10.71 cents per kilowatt-hour, Oregon is still relatively cheap on power compared to the rest of the US states. However, the less efficient your mining rig, the more you’ll be spending on power over time.
10 Worst States for Bitcoin Mining
In comparison with the ten best states for Bitcoin mining, the following ten states are the worst performers in terms of electricity costs. However, for reference, consider the fact that in South Korea, one Bitcoin can cost as much as $26,170 to mine.
At 15.88 cents per kilowatt-hour, New Jersey’s rates are one-and-a-half times higher than the lowest electric costs in the country. Still, with an efficient rig, you won’t be spending too much on electricity per Bitcoin. Over time, though, it’s a considerable difference in cost versus lower-rate states.
Despite its relatively high electricity costs- at least 16 cents per kilowatt-hour- Maine is still seeing a surge in Bitcoin mining activity. Overall, the phenomenon is a helpful reminder that our electric rate figures are averages, not the bottom line for every city in each of the states.
Part of Vermont’s high electricity cost likely stems from the fact that less than 35 percent of its electricity comes from within the state. Although its in-state energy production comes from renewable energy, the state still relies on power from the New England grid and Canada.
Though it may seem like the ideal startup in close-quarters areas of New York, high power costs may discourage many residents, as lower efficiency rigs can cost nearly $3,000 to operate.
Though its Silicon Valley has a reputation as the hub of everything tech, California’s energy rates are among the highest in the nation at around 18.16 cents per kilowatt-hour.
Nonregulated power producers are available in Rhode Island, but on a national scale, their rates are quite high- reaching 18.19 cents per kilowatt-hour.
Just over 19 cents per kilowatt-hour means more expensive electricity- so ideally, residents will equip themselves with high-efficiency rigs. At the same time, Massachusetts electricity deregulation means there may be more choices than the highest national average rate.
Some areas of Massachusetts have rates as low as about 10 cents per kilowatt-hour, but its national average reaches almost double that amount. Most cities in Massachusetts are not ideal for Bitcoin mining operations for that reason.
Expect to spend between $1,000 and $3,000 on electricity in Alaska, where the focus is less on cryptocurrency and more on physical goods for trade, such as oil, natural gas, and seafood.
The absolute worst state for electricity costs is Hawaii, where you’ll be spending almost 60 percent of the value of each Bitcoin on electricity costs. Even with the most efficient rig, the figures may not add up over time.
Our goal in deciphering the Bitcoin mining cost per state involves calculating energy rates and rig efficiency and speed to come up with an estimate for how much it costs to mine one Bitcoin in locations across the United States.
Energy Input Bitcoin Output
First, we estimated how much energy it would take each of our top three mining rigs to mine one Bitcoin. To calculate how much it costs to mine one Bitcoin, we began with a standard calculation that uses an updated worldwide hash rate of 42,980,660 TH/s (or 4,298,066,000 GH/s).
Following one Quora expert answerer’s calculations, we took the worldwide hash rate and divided it by each mining rig’s advertised hash rate. This gets us the visual of a “roulette wheel” with a specific number of slots. Then, we divide that number of “slots” by the turns of that wheel per month- 4,464.
The resulting figure is our number of months it will take to “win one round.” Dividing that by the winnings (12.5 Bitcoins) gives us an estimate of how many months’ worth of power it will take for that one Bitcoin.
Multiplying the number of days by the rig’s wattage, per kilowatt-hour calculator guidelines, gives an estimate of how much power each rig will need to mine a Bitcoin. The result comes in kilowatt-hour measurements.
Therefore, our calculations for each of the three rigs come up with the following results:
- The Bitmain AntMiner S9 runs 14 TH/s at 1,340 watts (we’re going with the highest output/energy requirement for our calculations), meaning it will require 5.5 months to mine one Bitcoin. Thus, it will take around 5,306.4 kWh.
- Our second rig, the Bitmain AntMiner T9, runs 11.5 TH/s at 1,450 watts. It will take about 6.7 months to mine one Bitcoin, meaning it will require about 6,994.8 kWh for one Bitcoin.
- Our third rig, the Bitmain AntMiner S7, runs 4.7 TH/s at 1,300 watts. It will take roughly 16.4 months to mine a Bitcoin, which amounts to 15,350.4 kWh.
Next, we looked at electricity rates per state. For this purpose, we’re using residential electricity rates for 2018. The prices are measured in cents per kilowatt-hour (cents per kWh). We multiplied the cost per hour for each state by the total kWh that each rig requires for its Bitcoin-generating period using the following formula:
[Watt rating per rig times hours run per day (24 for full-time operation) divided by 1,000 (to find kWh)] times (cents per kWh rate) times (number of days to mine one Bitcoin)
What we come up with is a figure in dollars that directly correlates with the production or mining of one Bitcoin.
Potential Pitfalls with Bitcoin Calculations
As you saw above, the worldwide hash rate often fluctuates. There is also the fact that the ability to “mine” Bitcoin depends on winning the lottery, so to speak, when it comes to entering the right numbers into the network’s repository. While the odds improve the more you mine, there are no guarantees that you’ll earn Bitcoin in correlation with the time you invest.
In addition to variances in the ability to obtain Bitcoin, its value also fluctuates. As of June 2018, one Bitcoin is equal to $7.720.99. However, that could change at any point, including after six months or more of mining via your new ASIC hardware computer.
How Does Bitcoin Mining Work?
If the term “mining” suggests images of workers digging for gold, that’s not only outdated but irrelevant definition when it comes to Bitcoin. A digital currency that exists only in the form of the computer-transmitted blockchain, Bitcoin doesn’t come out of the ground. However, “mining” the data does require specific equipment and processes.
The Bitcoin Mining Process
While it’s true that, theoretically, anyone can mine Bitcoin, it’s not as simple as performing an internet search. The Bitcoin network is continuously producing new Bitcoin. However, to access that piece of code, a “miner” must win a competition of sorts.
Although some miners claim that they’re solving complex mathematical formulas to earn Bitcoin, it’s computers that do most of the work. In fact, computers that have the right capabilities and can run fast enough will “solve” the problems on their own. The miner’s function is to start the problem-solving sequence in motion, generating “guesses” to submit to the network.
Once a miner solves a problem, they’ve earned a collection of Bitcoin transactions, which they then add to the blockchain. The blockchain is a continuously growing list that documents all Bitcoin transactions and records. At the end of 2017, the Bitcoin blockchain amounted to nearly 149 gigabytes.
Why Does Bitcoin Mining Cost So Much?
A combination of factors makes Bitcoin both valuable and costly to source, and the potential effects on the environment are one drawback. But it’s worth understanding the underlying costs of Bitcoin to make the best decisions toward equipment and location to begin mining if that’s your goal.
Equipment and Electricity Costs
The up-front investment required to purchase a robust and efficient mining rig is only the first expense you’ll encounter as you begin mining for Bitcoin. While our top three choices for mining rigs range from $1,000 to over $2,000, those amounts aren’t the only money down that mining requires.
Once you have a rig that’s capable of mining Bitcoin, you’ll need a reliable power supply to keep it going. While the average home uses 911 kWh of electricity per month, your mining rig will use substantially more power than the typical American family.
If you’ve never operated a Bitcoin-mining rig before, it’s vastly different than your home or office PC. Without enough cool air, the machine will become noisy, which is not only distracting but also potentially dangerous for your high-end equipment. Not just that, but you may need auxiliary means of cooling if the machine doesn’t have its own fan system, or if the system proves inefficient.
Plus, running your rig 24/7 is necessary to earn the highest amount of Bitcoin possible. After all, it will take time to “win” the Bitcoin problem-solving contest multiple times over, meaning constant operation for the foreseeable future.
In addition to electricity and equipment costs, another factor is repair costs. If you are not knowledgeable on how to repair PCs on your own, you’ll need to find a professional that can offer tech help if your hardware goes south.
For Bitmain hardware, any failure may have coverage under a manufacturer’s warranty. However, you may not have adequate coverage, depending on how long you’ve had the rig or whether you’ve purchased one second-hand. With that in mind, it may be more cost-effective to buy a brand-new machine rather than depend on a used one.
Bitcoin Transaction Fees
The final consideration when it comes to Bitcoin cost is that of transaction fees. Between 2013 and 2016, Bitcoin transaction fees jumped from 2.2 to 13.6 million dollars worldwide. While the value of Bitcoin continues to fluctuate, transaction fees are changing just as much. High transaction fees might mean more difficulty using Bitcoin as a currency, making the entire process less predictable.
While it’s a relatively new means of working from home, Bitcoin mining is a financially feasible pursuit for many people living in areas with low electricity costs. Fortunately, more choice is available than ever before, thanks to energy deregulation and the availability of more choices for consumers- whether they’re mining Bitcoin or simply running a household full of appliances.
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