BA-13 · LESSON 05

Mining economics

KEY DEFINITIONS

Terms used in this lesson

Block subsidy: New bitcoin that consensus permits a block's coinbase transaction to create at a particular height.
BTC: The common market ticker for bitcoin.
Hash rate: The number of mining hash attempts performed per second.
TH/s: Terahashes per second: one trillion mining hash attempts per second.
USD: United States dollar, the reference currency in a BTC/USD price.

Revenue depends on subsidy, fees, hash price, energy, hardware efficiency, uptime, financing, and difficulty.

35 min Difficulty 3/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · market ledgerEvery financial return is a ledger of positions, cash flows, and riskSelect any state to inspect its exact role.

RELATIONSHIP MAPCompeting paths and resolution

01
POSITIONAsset and liability
Start by naming the exact long, short, debt, collateral, or reserve position.
02
PRICE PATHEntry, exit, mark
Price changes affect each leg and can trigger margin or liquidation boundaries.
03
CASH FLOWSMining economics
The Mining economics model includes fees, funding, spreads, slippage, and timing.
04
RECONCILEassets = claims + equity
Every successor state must conserve the ledger under the chosen units.
05
STRESSChanged assumption
A useful model exposes what fails when liquidity, price, cost, or timing is adverse.

Rule shown: Claims about yield or profit are calculations from versioned assumptions, never protocol facts.

STAGE 1 OF 5POSITION: Asset and liability

Start by naming the exact long, short, debt, collateral, or reserve position.

Governing relationship: Claims about yield or profit are calculations from versioned assumptions, never protocol facts. Complete path: 1. POSITION, Asset and liability. Start by naming the exact long, short, debt, collateral, or reserve position. 2. PRICE PATH, Entry, exit, mark. Price changes affect each leg and can trigger margin or liquidation boundaries. 3. CASH FLOWS, Mining economics. The Mining economics model includes fees, funding, spreads, slippage, and timing. 4. RECONCILE, assets = claims + equity. Every successor state must conserve the ledger under the chosen units. 5. STRESS, Changed assumption. A useful model exposes what fails when liquidity, price, cost, or timing is adverse.

1. State transitionWhat exists, what changes, and what results

BEFORE

Miner produces 200 TH/s at 20 J/TH, runs 24 hours, electricity is $0.06/kWh, and earns modeled revenue $8.00 that day.

MECHANISM

From the active difficulty, expected blocks equal hashes attempted per day divided by difficulty times 2^32. A contemporaneous network-hash estimate is an alternative approxi…

AFTER

Positive energy margin is not net profit and can disappear with difficulty, price, fee, or uptime changes.

Text equivalent: Starting from Miner produces 200 TH/s at 20 J/TH, runs 24 hours, electricity is $0.06/kWh, and earns modeled revenue $8.00 that day. The mechanism begins when From the active difficulty, expected blocks equal hashes attempted per day divided by difficulty times 2^32. A contemporaneous network-hash estimate is an alternative approximation, not a second multiplier. Actual short… The resulting lesson is Positive energy margin is not net profit and can disappear with difficulty, price, fee, or uptime changes.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 5

Estimate expected blocks

From the active difficulty, expected blocks equal hashes attempted per day divided by difficulty times 2^32. A contemporaneous network-hash estimate is an alternative approximation, not a second multiplier. Actual short-run blocks remain random.

Complete path: 1. Estimate expected blocks: From the active difficulty, expected blocks equal hashes attempted per day divided by difficulty times 2^32. A contemporaneous network-hash estimate is an alternative approximation, not a second multiplier. Actual short-run blocks remain random. 2. Value reward: Multiply expected blocks by subsidy plus expected fees, then value BTC revenue at explicit prices and dates. 3. Calculate energy cost: Hardware efficiency in joules per terahash times hash rate determines power. Multiply kilowatts by hours and electricity price. 4. Include nonenergy costs: Hosting, repairs, cooling overhead, pool fees, payroll, insurance, taxes, debt, and depreciation can dominate marginal calculations. 5. Stress difficulty and price: More network hash lowers expected share until difficulty and block timing adjust. BTC price changes revenue value without directly changing consensus reward.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

The calculation uses dated assumptions and explicit TH/s, J/TH, kW, kWh, difficulty, BTC, USD, fee, operating-cost, and depreciation units through one complete cash-flow ledger.

CHANGED CONDITION

Invalid units, a stale or unclassified assumption, double-counted difficulty, omitted cost, or nonpositive revenue denominator withholds the profitability or break-even claim.

Important distinction: A miner is profitable whenever bitcoin price exceeds its electricity cost per bitcoin. Full profitability includes hardware, financing, hosting, downtime, pool variance, difficulty, fees, and the time value of capital.

Text equivalent: The accepted path is enforced by The calculation uses dated assumptions and explicit TH/s, J/TH, kW, kWh, difficulty, BTC, USD, fee, operating-cost, and depreciation units through one complete cash-flow ledger. If the required condition changes, Invalid units, a stale or unclassified assumption, double-counted difficulty, omitted cost, or nonpositive revenue denominator withholds the profitability or break-even claim.

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Learn the idea

Mining revenue equals block subsidy plus transaction fees multiplied by the miner's expected share of network block production. Hash price expresses expected revenue per unit of hash rate over time. Profit subtracts electricity, hosting, staff, pool fees, financing, downtime, and hardware depreciation. Difficulty and bitcoin price change independently.

GUIDED EXPLANATION1/5 ideas inspected

Estimate expected blocks

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“A miner is profitable whenever bitcoin price exceeds its electricity cost per bitcoin.”

Full profitability includes hardware, financing, hosting, downtime, pool variance, difficulty, fees, and the time value of capital.

FINISH LEARNING FIRST

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