Is cryptocurrency mining a viable way to earn income?

Fundamentals of Cryptocurrency Mining and Actual Profitability

For most investors, buying cryptocurrency through an exchange is standard practice. However, you can also acquire new coins by “mining”—a process that resembles extracting gold, but in digital form. Specialized devices perform complex calculations, and new coins are issued as a result.

Mining is more involved than buying on an exchange, but it lets you obtain cryptocurrency while keeping upfront costs relatively low. Still, profitability depends on many variables and requires careful analysis. This article thoroughly explains everything from the basics of crypto asset mining to evaluating its profitability.

Is Cryptocurrency Mining Profitable?

There is no simple answer to whether cryptocurrency mining is profitable. You need to research each target coin, factor in electricity costs to run mining hardware, account for equipment prices, and consider mining difficulty—all as part of a comprehensive assessment.

Because cryptocurrency prices fluctuate significantly, tracking market trends is essential. If a coin’s price falls below a certain level, mining may not be profitable. Many miners will stop supporting the network when prices drop, which can be observed as a market phenomenon.

Professional-grade mining equipment comes with a high price tag, making it difficult for individuals to enter the field. Mining pools can help improve efficiency, but they require entry fees and split profits among participants—so solo mining typically yields higher individual returns.

Many miners choose to mine lesser-known coins rather than Bitcoin. While these coins may have low value, they can be exchanged for other cryptocurrencies—including Bitcoin—and may appreciate in the future, making this a valid strategic approach.

It’s strongly recommended to use online mining profitability calculators before starting. These tools help you estimate potential returns and make more accurate investment decisions.

Electricity Costs: Impact and Strategies

Mining machines and ASIC devices run continuously and consume a massive amount of electricity. In regions with high electricity rates, Bitcoin mining becomes extremely expensive. Even in areas with lower rates, the reality is that mining one Bitcoin still incurs significant electricity costs.

Electricity expenses are among the most important factors for mining profitability. Since mining requires 24/7 operation, monthly power bills can be substantial. For instance, profitability differs greatly between regions with electricity priced at ¥10 per kWh and those at ¥30 per kWh—even with identical hardware.

To cut costs, you could mine cryptocurrencies other than Bitcoin with lower-performance machines. However, be prepared that it may take weeks or even months to recoup your initial investment or see a profit. You might also consider using renewable energy or focusing mining activity during off-peak times to further reduce costs.

Understanding Mining Difficulty

The hash rate is the primary metric used to measure cryptocurrency mining difficulty. As total computing power increases, the hash rate rises. If the network’s hash rate is high, certain hardware might no longer be profitable for mining.

Mining difficulty adjusts automatically based on the number of miners and total network computational power. More miners means greater competition for block discovery, lowering the odds of earning rewards for each miner. This system keeps block generation time consistent.

For high-profile cryptocurrencies like Bitcoin, mining difficulty continues to increase. Even top-tier hardware struggles to deliver the same profits as before. It’s essential to assess current and projected difficulty before starting to mine.

Equipment Costs and Upfront Investment

Mining requires an initial investment in equipment and setup. Unlike stocks or bonds, mining equipment is a physical asset, so you must also consider depreciation and the risk of obsolescence. Profits may take time to materialize.

Even for coins other than Bitcoin, a single graphics card typically costs over ¥70,000. Building a high-performance GPU mining rig with multiple cards can cost several hundred thousand yen. For less-known coins, you can build a basic mining machine for about ¥30,000.

Equipment prices vary by manufacturer; higher computing power and electricity consumption drive up costs. More powerful hardware means more mining capability, but lower energy usage reduces monthly costs. Understanding this trade-off is key to selecting the right setup for your needs.

When choosing hardware, examine both its lifespan and profitability. The main factors are price per 1TH (terahash), power consumption per 1TH, and hosting costs.

If hosting costs are low enough, it may make sense to prioritize “price per TH” even if efficiency drops, since lower operating costs can offset reduced performance. Consider warranty and manufacturer support for long-term operations as well.

Mining Pool Strategy

Mining pools allow you to increase mining speed and reduce difficulty, making it easier to earn rewards efficiently. As mining becomes harder, more miners join pools, which combine computational power for better odds of block discovery.

Two main reward systems are common.

Proportional Distribution Mining: Rewards are paid according to each miner’s contribution, and the amount depends on whether the pool successfully mines a block. This model is more profitable when Bitcoin prices rise, as increased rewards can offset rising difficulty. However, if the pool fails to find blocks, no rewards are paid, which adds risk.

Pay-Per-Share Mining: Rewards are divided according to the pool’s total mining power, and profits are shared evenly among members. Even if no block is mined, miners still earn income. This system guarantees steady payouts and suits those seeking stable returns or mining during periods of low Bitcoin prices.

Since cryptocurrency prices are always changing, miners must adapt to price swings to stay profitable. Miners often switch pools or reward systems based on Bitcoin price changes. Some pools respond to decreasing Bitcoin rewards by alternating between the two systems or developing hybrid payout models.

When choosing a mining pool, consider fees, payout frequency, minimum payout thresholds, and reliability.

Using Profitability Calculation Tools

Online profitability calculators can help you assess the cost-effectiveness of Bitcoin mining. These tools typically require inputs like hash power, power consumption, electricity costs, and mining pool fees. Entering accurate data yields more realistic forecasts.

Because Bitcoin’s value and electricity costs fluctuate, analyze multiple pricing scenarios. Adjust difficulty levels to see how they affect your results. Calculating break-even and profit thresholds gives you essential risk management insights.

Note that these calculators base their predictions on current data and cannot fully predict future market changes or difficulty shifts. Treat the results as reference points and plan your investments conservatively.

What Is Cryptocurrency Mining?

Cryptocurrency mining is the process of validating new transaction blocks and minting new coins on proof-of-work (PoW) blockchains. Bitcoin is the best-known example, but other PoW cryptocurrencies exist.

Major coins created through mining include Monero, Ravencoin, Litecoin, Grin, Zcash, and Ethereum Classic. Each uses its own algorithm and has unique traits.

To mine cryptocurrency, you need a specialized computer equipped with a high-performance CPU or GPU. Each blockchain may use different algorithms, so miners must configure their hardware and software accordingly.

Blockchains are distributed networks of computers that verify and secure transactions globally. Miners shoulder hardware, electricity, and maintenance costs, provided that mining rewards cover expenses and generate a profit.

Mining is fundamentally an economic incentive system for maintaining decentralized network security. Miners provide computational power to keep blockchains tamper-resistant and are compensated with newly issued coins.

Bitcoin Mining and Profitability

Bitcoin mining validates crypto transactions and produces new Bitcoin as block rewards on the blockchain. Bitcoin has the longest track record and the highest market capitalization, so it attracts many miners.

If Bitcoin’s price exceeds mining costs, miners earn a profit. Advances in technology and mining hardware have turned cryptocurrency—and Bitcoin mining—into a legitimate business. Large professional mining centers now leverage economies of scale to maximize profits.

Is Bitcoin mining truly profitable? Many say “yes,” but ultimately, individual miners must make that determination for themselves. Large mining farms and solo miners face very different electricity costs, equipment expenses, and operational efficiencies—so profitability varies widely.

Block Rewards: How Miners Earn Income

Block rewards are newly issued cryptocurrency awarded for each mined block. Every blockchain has a set block generation time. On Bitcoin’s blockchain, new blocks appear every 10 minutes, and the miner who first validates a block receives the reward.

Bitcoin’s anonymous creator set the initial block reward at 50 BTC in 2009 and programmed periodic reductions. The reward halves every four years, a process known as the “Bitcoin halving.”

In 2012, the block reward dropped to 25 BTC, then halved again to 12.5 BTC in 2016, and to 6.25 BTC in 2020. This halving mechanism limits Bitcoin’s total supply to 21 million BTC and ensures its scarcity.

Halving events directly affect mining profitability. Unless Bitcoin’s price doubles, miners’ income is cut in half. Around halving periods, many miners reassess operations and may retire inefficient equipment.

What Is Hash Rate? A Key Blockchain Metric

The hash rate measures the strength and security of a blockchain network. High hash rates lower the risk of malicious attacks and help miners assess profitability.

Hash rate quantifies the total computing power used to verify and approve blockchain transactions—it’s a measure of how quickly blocks are solved. As more miners join and add computational resources, the puzzles become harder.

In 2009, hash rate was measured in hashes per second. As mining scaled, SI prefixes became standard:

• Kilohash – KH/s (thousands of hashes per second)
• Megahash – MH/s (millions of hashes per second)
• Gigahash – GH/s (hundreds of millions of hashes per second)
• Terahash – TH/s (trillions of hashes per second)
• Petahash – PH/s (quadrillions of hashes per second)

Bitcoin’s exact hash rate isn’t published but can be estimated from block difficulty and mined blocks. The hash rate has soared in recent years, strengthening network security but raising barriers for individual miners.

Tracking hash rate trends reveals changes in mining markets and competitive dynamics. Sharp increases signal new miners joining or widespread hardware upgrades.

Hardware Required for Bitcoin Mining

As discussed, cryptocurrency mining demands specialized hardware. Before starting, research available mining algorithms and choose the best fit for your needs. High initial costs are a major hurdle for many miners.

Bitcoin mining requires ASICs—Application Specific Integrated Circuits—designed for specific tasks. ASICs vary in energy efficiency and performance.

Newer ASICs mine Bitcoin more efficiently but are power-hungry and expensive. The latest models can cost hundreds of thousands to millions of yen, putting them out of reach for most individuals.

ASICs are rated by hash rate (computational speed) and power efficiency (W/TH). Higher-end models mine more Bitcoin but use more electricity. In regions with higher electricity costs, the most powerful models may not be the best choice.

ASICs are tailored for specific algorithms, so a Bitcoin ASIC won’t mine other coins. This lack of versatility is a risk if market conditions change.

Is Altcoin Mining Profitable?

Depending on your setup, cryptocurrency mining can be profitable. Using high-performance GPUs or ASICs increases potential returns. Mining altcoins—non-Bitcoin cryptocurrencies—often has lower barriers to entry.

Cheap electricity boosts profitability, but you must also consider inflation and increased competition for Bitcoin rewards. Some altcoins have low mining difficulty, making it possible to profit with affordable hardware.

Many altcoins can be mined, and tools like WhatToMine help estimate potential returns. Several coins listed may yield $2–$3 per day. While returns are modest, you gain “free” tokens that could appreciate over time.

When choosing altcoins to mine, consider:

• Exchange liquidity (is the coin listed?)
• Project credibility (track record and future prospects)
• Hardware longevity (risk of algorithm changes)
• Fiat conversion (ease of cashing out profits)

“Multipool mining”—mining multiple coins at once or switching targets based on market conditions—is a common altcoin strategy.

Cryptocurrency Mining Profitability in Recent Years

Mining was highly profitable in Bitcoin’s early days. Recently, rising difficulty and institutional participation have changed the landscape. Before starting, individual miners should analyze cost-effectiveness, factoring electricity rates, efficiency, and Bitcoin price.

The industry has shifted from open participation to a specialized business. Large mining farms build facilities in regions with cheap power and deploy high-efficiency hardware to maximize scale benefits.

It may be worth considering PoW coins with low difficulty and accessible equipment, particularly new projects or less-publicized altcoins, which may offer early profit opportunities.

Altcoin mining carries unique risks—project failure could zero out coin value, and algorithm changes may obsolete your hardware. Weigh these risks carefully before investing.

To succeed in mining, you need to monitor markets continuously, maintain equipment properly, and optimize power costs. Passive “set and forget” approaches rarely succeed; active management and strategic oversight are vital.

FAQ

What Is Crypto Asset Mining? How Does It Work?

Crypto asset mining involves verifying and approving blockchain transaction data, with miners earning crypto assets as rewards. Miners solve complex computational challenges to create new blocks and maintain network reliability. Successful miners receive newly issued crypto assets.

Can You Actually Make Money with Crypto Asset Mining? What’s the Average Profit?

It’s possible to profit from crypto asset mining, but earnings depend heavily on hardware costs, electricity expenses, and mining difficulty. Joining mining pools improves efficiency, but beginners generally have lower profit expectations.

What Are the Upfront Costs for Mining Equipment and Electricity?

Typical initial investment is about ¥900,000, with monthly electricity costs around ¥78,000. Even with the latest ASICs (Antminer S21), mining in Japan results in a monthly shortfall of roughly ¥40,000, making it hard to recover your investment.

How Do Mining Difficulty and Profitability Differ Between Bitcoin and Altcoins?

Bitcoin mining difficulty is frequently adjusted and higher and more stable than most altcoins. Altcoin mining profits fluctuate more, so Bitcoin’s profitability is easier to predict.

What Risks Are Involved in Mining? Can You Lose Money?

Mining carries the risk of crypto asset price declines. If electricity costs exceed mining rewards, you may incur losses. Hardware investments and market volatility must also be considered.

Is Solo Mining or Joining a Mining Pool Better?

Mining pools offer stable earnings and suit beginners. Solo mining is high risk and can yield higher rewards for those with capital and technical expertise, but pools are generally more efficient for most miners.

Is Crypto Asset Mining Still a Profitable Investment in 2024?

As of 2026, mining remains profitable. The effect of halving has eased, and rising Bitcoin prices have improved returns. Efficient hardware and low-cost operations continue to offer earning opportunities.