But as technology has developed and professional mining centers with enormous computing power have started to monopolize the market, many of us are wondering if Bitcoin mining is still profitable?
There are several elements which determine if Bitcoin mining is still a profitable endeavor. These include the electricity required to power the computer system (cost of electricity), the cost of the hardware or computer system, and the mining difficulty. The difficulty is measured in the hashes per second required for the validation of a single Bitcoin transaction.
The hash rate is the rate at which a problem is solved—the difficulty increases as more miners join because the network is intended to produce a certain number of Bitcoins every ten minutes. When more miners start to participate, the difficulty changes to ensure that the level is static.
The last factor that determines profitability is the price of Bitcoins against fiat currency.
The Components of Bitcoin Mining
Before new Bitcoin mining software was developed in 2013, people could use their personal computers to mine. But then application specific integrated circuit chips (ASIC) came along, and this hardware equipment had a capacity of up to 100x of older personal machines, making Bitcoin mining through personal computing inefficient and obsolete.
Before ASICs, the difficulty in mining Bitcoins was consistent with the price of the virtual coins. But with these new technologies came issues regarding the high cost to obtain and run the new hardware and its inaccessibility.
Profitability Before and After ASIC
In the beginning, mining Bitcoins was profitable for individual miners for a number of reasons. First, these miners already owned their computer, so no hardware investments were required at that point. The settings on their computers could have been modified in order to make them run more efficiently with less strain.
Also, this was the era before large Bitcoin mining operations with enormous computing power started entering the market. The only competition miners had back then were other individual miners that also used their computer systems. The competition was balanced. Even when electricity costs varied because of the user’s location, the discrepancy was not enough to discourage people from mining.
After ASICs entered the game, the rules changed. Miners were now competing against large mining organizations that had more computing power. Mining profits were reduced due to additional expenses such as acquiring new computing hardware, higher energy costs, and the increase in mining difficulty.
Profitability in Today’s Environment
Bitcoin mining can be profitable for some individuals. Potential miners should carry out a cost/benefit breakdown to understand their breakeven price before buying the equipment.
The variables required to make this calculation are:
- Cost of power: The rate of your electricity. These rates can vary depending on the season, the time of day, and other variables.
- Efficiency: The power your system consumes which is measured in watts.
- Time: The anticipated duration of your mining operations.
- Bitcoin value: The price of bitcoin in U.S. dollars or other official currency.
There are several web-based profitability calculators which miners can use to analyze the cost-profit equation of Bitcoin mining. Profitability calculators vary amongst them as they have different levels of complexity and variables that can be inputted. 
To be able to compete against big mining facilities, individuals can join a mining pool, which is a group of miners that put together their computing power to produce Bitcoin. This can increase the speed and lower the mining difficulty, but the downside to this is that the profit is split among many miners, leaving you with very little of a block reward.
Conclusion
To really answer if Bitcoin mining is still profitable, you can use a profitability calculator to run a cost-profit analysis. Figure out if you are willing to invest the necessary initial capital for the hardware, and estimate Bitcoin’s value in the future as well as its mining difficulty. When both prices and mining difficulty drop, it usually means fewer miners and more Bitcoin to mine. When the opposite occurs, more miners are competing for fewer Bitcoins.