Revenue: your share of a fixed reward
Miners collectively earn a fixed block reward plus fees. Your revenue is your share of total network hashrate, so it falls whenever the rest of the network grows, even if your machines are untouched. Network difficulty adjusts to keep block timing stable, which means rising global hashrate quietly reduces the coins each machine earns over time. Halvings cut the block reward on a schedule, halving that revenue line in one step.
- Revenue depends on your share of network hashrate, not on your machine's absolute speed.
- Difficulty growth is the default assumption; a model without it is optimistic.
- Halvings are scheduled and their effect on revenue is immediate.
Cost: power price times efficiency
Mining cost is dominated by electricity. A machine's efficiency — watts per unit of hashrate — combined with the all-in power price determines your cost per coin mined. Hosted arrangements add hosting fees, and self-hosting adds infrastructure, cooling, maintenance and downtime. Cheap power with poor uptime can be worse than slightly dearer power that actually runs.
- Use the all-in energy rate, including fees and demand charges, not the headline rate.
- Efficiency determines how long a machine stays economic as difficulty rises.
- Uptime is revenue: a machine offline earns nothing while the contract still bills.
The contract is part of the economics
For hosted mining, the terms decide as much as the hardware: hosting rate and how it can change, who bears curtailment, uptime commitments and remedies, maintenance and repair responsibility, deposit and termination terms, and what happens to your machines if the host fails. Read these before comparing projected returns, because a favourable projection under an unfavourable contract is not a comparison at all.
- Check how and when the hosting rate can be adjusted.
- Understand curtailment: who decides, how often, and whether you are compensated.
- Confirm ownership, insurance and what happens on default by either side.
Modelling honestly
A defensible model runs several bitcoin price paths and several difficulty paths, includes the halving, accounts for machine resale value at the end of the term, and states the break-even bitcoin price at which the operation stops covering power. If an operation only works at a price far above today's, that is the real conclusion, whatever the headline projection says.
- Model a downside price case, not only a rising one.
- Include resale value — and remember older machines sell for less as efficiency improves.
- Break-even price is the single most useful number to quote back to anyone selling you a deal.