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Analyzing the Profitability of Bitcoin Mining vs. Ethereum Staking

April 30, 2024

Analyzing the Profitability of Bitcoin Mining vs. Ethereum Staking

by SASKIA

Based on this article https://www.unlock-bc.com/122387/solo-bitcoin-miner-strikes-gold-nets-218544-reward/ I asked Chat GPT to analyze the profitability of being a solo Miner on Bitcoin versus being a solo staker on Ethereum.

Here is what ChatGPT calculated:

Analyzing the Profitability of Bitcoin Mining vs. Ethereum Staking

In the world of cryptocurrency, investment strategies vary widely in terms of initial costs, potential returns, and risk levels. Today, we’ll compare two distinct approaches: solo Bitcoin mining using powerful ASIC hardware and Ethereum staking through a more user-friendly Avado node.

Bitcoin Mining: High Cost, High Reward

Costs

  1. Hashrate Requirement: To mine Bitcoin solo, aiming for 12 petahashes per second (PH/s) is essential.

  2. Hardware: Approximately 109 units of Antminer S19 Pro are required, each with a hashrate of about 110 TH/s.

  3. Cost of ASIC Miners: Assuming an average price of $4,000 per unit, the total hardware investment would be:

    109 units×$4,000/unit = $436,000

  4. Electricity Consumption: Each miner uses about 3,250 watts, leading to:

    109×3,250 watts=354,250 watts = 354.25 kW

  5. Annual Electricity Cost: Assuming $0.10 per kWh and continuous operation:
    354.25 kW×24 hours×365 days = 3,102,190 kWh

    Cost=3,102,190 kWh×$0.10/kWh = $310,219

  6. Operational Costs: Maintenance adds about 20% to the electricity expenses:
    0.20×$310,219=$62,044

Annual Operating Costs:
\ $310,219 (electricity)+$62,044 (maintenance) = $372,263
Returns:

The potential reward per solved block is $218,544, but the probability of solving a block solo (0.02%) is extremely low.

Ethereum Proof of Stake via Avado

Costs

Hardware Cost: A one-time purchase of the powerful Avado r9 costs $3,200.

Staking 32 ETH: With the current Ethereum price of $3,000 per ETH, the investment for purchasing 32 ETH is:

\ 32 ETH×$3,000/ETH = $96,000

Returns

Annual Return at 3.5% APY:
32 ETH×3.5% = 1.12 ETH

\ In USD=1.12×$3,000 = $3,360

Comparative Analysis and Long-Term Profitability

  • Bitcoin Mining: Requires a substantial initial investment of $436,000 and high ongoing costs of $372,263 per year. The infrequent rewards make this option highly risky and unpredictable.
  • Ethereum Staking: The more conservative strategy requires a lower initial investment of $99,200 and promises a steady annual return of $3,360. This approach offers predictability and reduced risk.

Conclusion

Comparing the two investment strategies, Ethereum staking clearly presents a more accessible and less volatile option. While the returns from staking are modest compared to the potential windfall from solo Bitcoin mining, the lower risk and steady income make Ethereum staking particularly attractive for investors not willing to gamble large sums on the high-risk, high-reward nature of Bitcoin mining.

In conclusion, for those looking for a safer entry into cryptocurrency investments with predictable outcomes, Ethereum staking with an Avado node is a compelling choice. Conversely, solo Bitcoin mining remains a game for those who can afford the significant financial outlay and the uncertainty of returns.