Now that we’ve discussed fixed costs, or hardware costs, let’s finish up the equations with An understanding of the variable costs in mining.
So as we know, there’s several different costs of energy consumed in the process of mining, all of which are considerations for the cost of Bitcoin on the environment.
These energy costs come in multiple forms, but primarily the following three.
Embodied energy is consumed when producing hardware, electricity powers hardware, and cooling maintains hardware as it heats up.
All these types of energy are considerations, but electricity and cooling are the variable energy costs that are the bigger considerations when looking at long-term profit projections.
On top of that, there is infrastructure and overhead to maintain as well, such as space and employees.
Depending on the scale of your operation, you may need to go so far as to purchase entire warehouses and a few maintainers to ensure that nothing goes wrong with the hardware, or to take care of things when hardware goes down.
Finally, you understand everything there is to know about how to profit from mining.
If you keep your revenue above your costs, you’ll make a profit from mining! Keep in mind that most mining operations, don’t turn a profit for quite a while, so do much more research before spinning up your own ASIC farm.
Speaking of ASIC farms, we’ll go ahead and examine what some mining operations look like in the real world in the next section.