Is bitcoin mining profitable
This page aims to give a beginners explanation to the question "Is Bitcoin Mining Profitable ?"
In order to determine the profitability of Bitcoin mining you need to take into account the following parameters:
Network Hash Rate - What is the combined computing power of all of the network miners.
Network mining difficulty - As more miners join the network the network difficulty increases in order to mine a constant amount of Bitcoins in a given time period.
Electricity rate - How much money are you paying per per KW for running your miner.
Power consumption - How much power is your miner consuming. This is measured in Watts and can be found here.
Time frame - how long are you considering mining for.
Cost of mining hardware - as described.
BTC conversion rate - this is only important if you want to exchange your BTC to a different currency. If you wish to only gain Bitcoins you can disregard this variable, but since most people want to profit in some other currency it usually is important.
The problem of profitability decline
The biggest variable that can not be predicted is how much will the difficulty increase throughout time. This will in turn cause a profitability decline. In order to take this variable into account, several mining profitability calculators have incorporated a "profitability decline" factor. This factor of course is an educated guess at the most.
The problem of variating BTC exchange rate
Much like the network's difficulty, the Bitcoin's exchange rate can also not be predicted. It may stay the same throughout your predicted time frame, increase or collapse completely. This also makes predictions of mining profitability inaccurate.
Mining profitability in 2014
Taking the above mentioned variables into account and considering the Bitcoin network's leap in difficulty at the end of 2013 it is currently not profitable to mine Bitcoins from your own home. Other alternatives can be mining through a could mining service or mining Altcoins and exchanging them to Bitcoin.