Apr 24, 2025 Current Resources

If bitcoin mining isn’t that profitable, why do people do it

Key Points

Research suggests people mine Bitcoin for potential profits, educational value, and network support, despite low profitability for many.

It seems likely that speculation on price increases and the chance of big rewards also motivate miners.
The evidence leans toward financial commitments and historical success stories influencing mining, with some controversy around profitability for small-scale miners.

Overview

Bitcoin mining can be unprofitable for individual miners due to high costs, but people still engage in it for various reasons. Here’s a simple breakdown for understanding why.

Potential for Profit

Even with low profitability, some miners operate in areas with cheap electricity, making it worth it. For example, large operations or those with access to low-cost energy can still see returns.

Educational and Hobby Value

Many mine Bitcoin to learn about blockchain technology or as a hobby. It’s like a fun project, especially with devices like the Bitaxe, which is great for beginners.

Supporting the Network

Some miners do it to help keep Bitcoin decentralized and secure, contributing to the network’s integrity, which is a core value of the cryptocurrency.

Speculation and Big Rewards

Miners often hope Bitcoin’s price will rise, making their efforts profitable later. There’s also the rare chance of finding a block and earning a big reward, like 3.125 BTC, worth tens of thousands.

Other Motivations

Reasons include running mining as a business, diversifying investments, meeting financial obligations like loan repayments, joining mining pools for steady earnings, and being inspired by early miners’ success. Some also believe future tech or market changes will make mining more profitable.

For more details, check out resources like Investopedia on Bitcoin Mining or Bitbo Store on Mining Reasons.

Detailed Analysis: Reasons for Bitcoin Mining Despite Low Profitability

This section provides a comprehensive examination of why people engage in Bitcoin mining even when it is often not highly profitable for many individual miners, especially as of April 24, 2025. Bitcoin mining, the process of validating transactions and adding them to the blockchain by solving complex cryptographic puzzles, has seen increased competition and rising costs, particularly with the 2024 halving reducing block rewards to 3.125 BTC. Despite these challenges, miners continue to participate for a variety of reasons, ranging from financial to ideological and educational.

Background and Context

Bitcoin mining began as a hobby for early adopters, with significant rewards of 50 BTC per block in 2010, now worth around $1.3 million USD in 2024, as noted by Bitbo Store on Mining Profitability. However, with the network hashrate reaching 85 Exahash in March 2024 and current conditions showing a high of 772.68 EH/s, individual miners face stiff competition from large operations and institutional players. The high cost of ASIC miners ($2,000–$20,000) and electricity, which can consume more than many countries (e.g., 166.75 terawatt-hours annually, per Bankrate on Bitcoin Mining), often makes mining unprofitable for amateurs, especially at typical U.S. home rates of $0.12/kWh, where a Whatsminer M20S might run at a loss, as per Bitbo Store.

Despite this, mining activity persists, with miners earning around $20 million worth of Bitcoin per day in 2024, totaling $600 million monthly, indicating significant aggregate revenue. This section explores the multifaceted reasons behind this persistence.

Detailed Reasons for Mining

Potential for Profit with Favorable Conditions
Research suggests that mining can still be profitable under specific conditions, such as low electricity costs. For instance, in regions like China, Russia, or Kazakhstan, where electricity costs are around $0.045/kWh, a Whatsminer M20S can earn $45 monthly, as detailed in Bitbo Store. Large operations or those with access to renewable energy surpluses, like hydroelectric power, can offset costs, making mining viable. Investopedia on Bitcoin Mining notes that joining a mining pool with a capable system can net a few hundred dollars monthly before expenses, if lucky, especially with efficient hardware like Antminers ($1,320–$14,521, speeds 120–473 TH/s) or Whatsminers ($540–$8,569, speeds 102–412 TH/s).
Speculation on Bitcoin Price Appreciation
It seems likely that many miners believe Bitcoin’s price will increase in the future, making their current mining efforts profitable over time. Blockworks on Mining Economics highlights that miners are generally committed hodlers, relying on BTC appreciation, and sell primarily to cover costs during bear cycles. The article notes miners doubling down during unprofitable periods, expecting future price surges, as seen in the winter and spring of 2021 when miners took major profits.
Educational and Hobby Value
The evidence leans toward mining being a learning tool or hobby for many. Investopedia mentions it as a way to understand blockchain, and devices like the Bitaxe are marketed for educational purposes, ideal for beginners to tinker with, as seen in community discussions. For some, it’s like a tech project, offering hands-on experience with cryptocurrency, even if earnings are minimal.
Supporting the Network and Decentralization
Some miners are motivated by the desire to support Bitcoin’s decentralization, a core principle. Bitbo Store notes small miners may re-enter if sustainable, cheap power becomes accessible, increasing decentralization and aligning with Satoshi Nakamoto’s vision. Mining contributes to network security by adding hash rate, ensuring the blockchain’s integrity, even if individual rewards are low.
Chance of Big Rewards
Despite the rarity, there is always the chance of finding a block and earning the full block reward, currently 3.125 BTC, worth around $294,187.08 at $93,727.96/BTC as of April 24, 2025. Bitbo Store calculates a 1 in 1,470,588 chance for a 68 TH/s miner, potentially waiting 16 years, but the lottery-like appeal persists, with some miners hoping for a windfall.
Business Opportunities for Large Operations
Large-scale mining operations can be profitable and are run as businesses. Investopedia notes that professional mining centers have affected individual profitability, but for large farms with cheap electricity (e.g., Venezuela, Iran, using older Bitmain S9 at sub-$0.02/kWh), it remains viable. These operations scale up, aiming for economies of scale.
Diversification of Investment Strategy
Mining can be part of a broader cryptocurrency investment strategy, allowing miners to diversify holdings. Investopedia suggests it’s a way to hedge against price volatility, accumulating Bitcoin directly rather than buying on exchanges.
Financial Commitments and Leverage
Many mining operations are financed with loans, and miners must continue to operate to service debts. Blockworks reports $4 billion in miner financing, with lenders like Galaxy Digital and NYDIG at risk, pressuring miners to continue despite losses, especially with equipment and BTC as collateral.
Mining Pool Participation for Steady Earnings
Joining mining pools increases the chances of earning rewards more consistently. Bitbo Store details pools like F2Pool (15% of network) using PPS+ payout, offering daily payouts (e.g., 0.000702 BTC/day before 2.50–4.00% fees for a 68 TH/s miner at 85 EH/s, netting $6.16/day at $9,000 BTC). This steady, albeit small, income motivates miners.
Historical Success Stories and Inspiration
Early miners who held onto their Bitcoin have seen significant gains, inspiring current miners. Bitbo Store notes that mining one block in 2010 and holding would be worth $1.3 million USD in 2024, fueling hope for similar outcomes.

Future Potential and Technological Advances
There is hope that future advancements, like ASIC innovation reaching diminishing returns or sustainable, cheap power becoming accessible, will make mining more profitable. Bitbo Store suggests this could increase decentralization, aligning with Bitcoin’s vision.
War of Attrition and Persistence
Some miners continue as part of a war of attrition, hoping to outlast others and gain a larger share of rewards post-shakeout. Blockworks notes miners doubling down during unprofitable periods, aiming to be among the last standing, especially with hash rate trends showing no major capitulation yet, reaching 266 million TH/s in June 2022.

Comparative Analysis and Tables

To organize the reasons, here’s a table summarizing key motivations and their relevance:

Reason	Relevance	Example/Detail
Potential Profit	Profitable with low electricity costs	$45/month profit at $0.045/kWh, per Bitbo Store
Speculation on Price	Belief in future price increase	Miners hold BTC expecting appreciation, per Blockworks
Educational/Hobby	Learning about blockchain, fun project	Bitaxe for beginners, per community discussions
Network Support	Contributes to decentralization and security	Aligns with Satoshi’s vision, per Bitbo Store
Chance of Big Rewards	Rare block find, 3.125 BTC reward	1 in 1,470,588 chance for 68 TH/s, per Bitbo Store
Business Opportunities	Large operations scale for profit	Large farms in Venezuela, Iran, per Bitbo Store
Diversification	Part of broader crypto strategy	Hedge against price volatility, per Investopedia
Financial Commitments	Need to service loans, avoid default	$4 billion in financing, per Blockworks
Mining Pools	Steady earnings through pools	PPS+ payout, 0.000702 BTC/day before fees, per Bitbo Store
Historical Success	Inspired by early miners’ gains	$1.3 million USD for 2010 block, per Bitbo Store
Future Potential	Hope for tech advances, cheap power	Sustainable energy could increase profitability, per Bitbo Store
War of Attrition	Outlast others for larger reward share	Double down during unprofitable periods, per Blockworks

This table highlights the diversity of motivations, from financial to ideological, explaining why mining persists despite low profitability for many.

Controversy and Uncertainty

There is some controversy around the profitability for small-scale miners, with Investopedia noting it’s difficult for individuals to reap significant rewards due to competition, while Blockworks suggests large operations might still find it viable. The evidence leans toward mining being more about long-term strategy and network support than immediate profits for many.

Recommendations and Practical Implications

For those considering mining, perform a cost-benefit analysis using tools like BTC.com’s Calculator, considering electricity costs, hardware efficiency, and pool payouts. Limit screen time for children to mitigate potential myopia risks, as discussed in related research, and ensure proper eye care if engaging in prolonged near-work activities.

Conclusion

In conclusion, research suggests people mine Bitcoin for potential profits under favorable conditions, educational value, and network support, with speculation on price increases and the chance of big rewards also motivating miners. The evidence leans toward financial commitments and historical success stories influencing mining, with some controversy around profitability for small-scale miners. These multifaceted reasons, detailed in the table above, explain why mining continues despite challenges, aligning with both financial and ideological goals as of April 24, 2025.

Key Citations