Bitcoin (BTC) uses the Proof of Work (PoW) consensus algorithm as the basis of its security. This means that like many other cryptocurrencies, a network of cryptocurrency miners is used to discover blocks and add pending transactions to them, to render them irreversible.
The block discovery process, which takes approximately 10 minutes per block, also results in the minting of a fixed number of new Bitcoin per block. This is currently set at 6.25 BTC per block, but halves approximately every four years (210,000 blocks), reducing the number of Bitcoin minted with each newly discovered block.
This BTC is provided as an incentive to the miner (or miners if using a mining pool) that discovered the block.
How long it takes to mine 1 BTC
Although it takes 10 minutes to discover each block and each block yields a 6.25 BTC reward for the miner that successfully discovered it, it’s important to understand that the entire Bitcoin mining network is essentially competing in this block discovery process.
This means that only a single miner in the entire mining network will actually successfully discover the block—and since there are potentially tens of thousands of Bitcoin miners in operation, the odds of single-handedly discovering a block is quite low.
For this reason, the vast majority of Bitcoin miners work together as part of a mining pool, combining their hash rate to stand a better chance of discovering a block. Then, regardless of which miner in the pool actually discovers the block, the rewards are distributed evenly throughout the pool.
Consequently, a miner that contributes 1% of a pool’s hash rate, will also receive 1% of the block rewards it accrues.
F2Pool is currently the most dominant Bitcoin mining pool, with a 16.6% hash rate share. (Image: BTC.com)
F2Pool is currently the largest pool by hash rate share, contributing around 20.52 EH/s of the total Bitcoin hash rate of 123.39 EH/s. This 16.6% hash rate share essentially means that around 16.6% of all newly minted BTC are mined by this pool—equivalent to 149.4 BTC per day.
An individual miner that contributes 1% of the pool’s hash rate (~205 PH/s) would earn approximately 1.494 BTC per day. This means a miner would need close to 132 PH/s of hash rate to mine an average of 1 BTC per day at current difficulty levels.
Before the decade is over, only 225 #BTC will be minted per day and enter the market as fresh supply. Compared to the start of 2020, when 1800 were created daily, this means a ~90% loss in new supply.
—@ZubrExchange analysis covered by @decryptmedia https://t.co/8QbZp6GjJd
— f2pool (@f2pool_official) July 2, 2020
To put this into perspective, this is the equivalent of 1,200 Antminer S19 Pro mining rigs—currently one of the fastest ASIC miners on the market. The total cost for this setup would likely be somewhere around $2.4 million, assuming a unit price of $2,000/ea.
For those with a smaller budget, it would take a single Antminer S19 Pro a total of 1,200 days to generate 1 BTC in rewards when working with a mining pool—that’s the equivalent of generating 0.0000833 BTC/day in rewards.
To calculate how long it would take another mining rig to generate 1 BTC in rewards, you can simply plug its hash rate into the following equation: 1 / (hash rate (in PH/s)) * 0.0076. This result will produce the number of days it will take to generate 1 BTC in rewards at current difficulty levels.
Can Bitcoin miners go solo?
Although most Bitcoin miners tend to focus their efforts as part of a mining pool, it’s also possible to go it alone.
Unlike Bitcoin mining pools, which essentially guarantee smaller regular payouts and eliminate most of the risks involved with Bitcoin mining, solo mining is more of a gamble—but can also be more rewarding. Since solo miners don’t need to pay any mining pool fees, the overall mining profitability can be slightly higher than working with a pool, particularly for those running a sizeable mining operation.
Old miners should seek cheap electricity to turn profits post-halving
Statistically speaking, a solo miner looking to generate 1 BTC per day would need to contribute just over 0.11% of the total Bitcoin hash rate. As we previously mentioned, this is equivalent to around 132PH/s or the combined output of 1,200 Antminer S19 Pro mining units. On average this mining operation would discover a block yielding a 6.26 BTC reward every 6.25 days, which averages out to 1 BTC/day.
Because even gigantic 1,200 rig mining operations would take almost a week to discover a single block, miners with just a few machines would likely go years without discovering a block, making the practice extremely risky in most cases.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.