Calculate the future value of bitcoins over time

And correct estimations are essential to successful mining at any scale, small or large. This article is written as a companion resource to the profitability calculator. Each of the data points available on the Braiins calculator are explained so miners understand what they represent, how to find the data needed for each field, and how to correctly calculate their own mining profit projections.

Time One of the first and most simple inputs is the timeframe for measuring revenue and profitability. The idea that Bitcoin incentives long-term planning is especially true in mining. Focusing on longer time periods is a more common strategy instead of mining with very short-term profit expectations. Set the range on the Braiins calculator for whatever timeframe is appropriate, between 6 and 60 months. Bitcoin Price This metric is also simple and easy to enter. Input the current bitcoin price based on the number displayed by whatever exchange a miner prefers to use or a data aggregator like OnChainFX.

Network Difficulty Input the current network difficulty level to this field. See current difficulty level on the Mining Insights dashboard. Hashrate Hashrate is a value derived from the estimated amount of hashes being generated to solve new blocks. Every make and model of mining hardware has a factory estimated hashrate in the product details.

Find the hashrate for whatever machines are or will be operational, and sum the total hashrate for all operational machines. Enter the value in the Hashrate field. See historical hashrate data on the Mining Insights dashboard. One kW equals 1, W. Every bitcoin mining machine specifies its factory estimated power consumption in the product details, but the real number can fluctuate. Electricity Price The cost of power is one of the data points miners care about most, and electricity prices can vary significantly across different geographic regions.

Prices can also vary over time unless a miner secures a power purchase agreement with future power price predictability. Even without that agreement in place, for the purposes of estimating future revenue, a miner can generally use their current power price for future projects. Consider also slightly adjusting power prices up and down to see its effects on future profit. Block Subsidy The number of new bitcoins created when each block is mined is the block subsidy.

This number changes after each halving event, which takes place once every four calendar years, approximately. For most revenue calculations, adjust the block subsidy if the model is extended beyond the date of the next halving.

Otherwise the current block subsidy can be used. During the pandemic, central banks across the world have been creating massive amounts of money. Bitcoin is limited to a maximum number of 21 million, meaning that it is impossible for more than 21 million of Bitcoin to exist. Currently, there exist about Theoretically, this limit could be changed , but it seems very unlikely that this would ever happen.

The fact that Bitcoin is not tied to normal 'fiat' currency systems means that in case more money gets created by central banks, Bitcoin is not affected and is likely to rise as a result of this. Some investors thus view Bitcoin as a hedge against inflation. I view the use case as a medium of payments as a relatively limited one for Bitcoin. There exist many competitors on this front that transfer payments better, and likely more secure, such as stablecoins, when they will be regulated like normal financial institutions.

I think the use case of Bitcoin as a store of value however is likely to be a very strong one. Fair value cannot be calculated using 'normal' indicators Unlike stocks, which are parts of a company that has earnings, revenues, and debt, Bitcoin and cryptocurrency do not possess metrics that can be used to calculate ratios to indicate whether it is cheap or expensive at this moment.

You could potentially look at the value of money transactions in a specific time period, but since I believe that the use case of money transactions will not be the main one for Bitcoin, this will not give a full picture. I will look at a different store of value that currently exists. In the past, I often compared Bitcoin to gold. Gold has been used as a store of value through the ages and has limited industrial use.

As such, the two might be comparable on some levels. This means that when you consider assets that are used almost purely for value storage, gold still eclipses Bitcoin by quite a lot. Though there exist many more important storages of value, such as bonds, money, real estate, stocks, collectibles, valuable drinks such as wine and whisky, I believe gold is one of the least bad comparisons available for Bitcoin.

This is due to the fact that both do not directly produce anything and cannot be consumed. Fair value estimates Gold returned an average of

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