Is mining cryptocurrency profitable forever? How mining fees are calculated?

[wealthypioneers]

Because cryptocurrencies are decentralized systems running on peer-to-peer networks, and there is no central server farm, it’s necessary to build into the system an incentive to get people to run the software that powers the system on their personal hardware. Mining also answers the problem of how to distribute the currency, by forcing individuals to work for it.

Miners must pay non-cryptocurrency for the computer hardware they use and the electricity that hardware uses. Miners with slow hardware will have trouble competing with those using large, custom-built farms of mining hardware. In the early stages of mining when a cryptocurrency is new, mining can be an easy way to earn. However, as mining become progressively more competitive, unsuccessful miners will probably spend more on electricity than they will earn in free currency.

Once a miner successfully decrypts a transaction hash, it is added to the block. Blocks are added to the blockchain roughly every ten minutes, at which point the miner earns a set amount of Bitcoin. As you can see in this example from blockexplorer.com, there are about 2000 transactions per block.

There is no guarantee that a transaction will make it into a block any time soon. In theory, it could sit in the pending pool indefinitely. This is where fees come into play.

The first blocks that were mined produced a reward of 50 BTC per block. However, the system is designed to cut the number in half every 210,000 blocks. For a while, miners earned 25 BTC per block, but when it reached block 420,000 in 2016, it halved again, at which point the reward for mining became 12.5 BTC per block. The reward for mining will remain 12.5 BTC per block until it reaches block 630,000, when it will halve again to 6.25 BTC.

[mayo2u]

The short answer is yes: Mining will be profitable forever.  Cryptocurrency is not based on altruism. If it's not profitable nobody will mine. And if no one is mining then the coin cannot process transactions.

That being said it doesn't mean that, in the future,  it will be as easy as it is today to get into cryptomining.

[component9]

Bitcoin mining is not profitable forever because the difficulty keeps on increasing over time. The difficulty ensures only one block is found every 10 minutes; the difficulty gets adjusted every 2016 blocks, or every 2 weeks.

You can try this mining profitability calculator which includes the current difficulty: https://www.coinwarz.com/calculators/bitcoin-mining-calculator

You can view a historical difficulty chart here (the difficulty is the red line): https://bitcoinwisdom.com/bitcoin/difficulty - that page also lists the prediction for the next difficulty (at the top "Estimated Next Difficulty").

The amount of computing resources (hashrate) you need increases as the difficulty increases, so you need to invest in new hardware with a higher hashrate.

[mayo2u]

Bitcoin mining is not profitable forever because the difficulty keeps on increasing over time. The difficulty ensures only one block is found every 10 minutes; the difficulty gets adjusted every 2016 blocks, or every 2 weeks.

You can try this mining profitability calculator which includes the current difficulty: https://www.coinwarz.com/calculators/bitcoin-mining-calculator

You can view a historical difficulty chart here (the difficulty is the red line): https://bitcoinwisdom.com/bitcoin/difficulty - that page also lists the prediction for the next difficulty (at the top "Estimated Next Difficulty").

The amount of computing resources (hashrate) you need increases as the difficulty increases, so you need to invest in new hardware with a higher hashrate.

I have to disagree. Mining will always be profitable for some people.

Mining is getting less profitable. I, for one, consider BTC mining to be unprofitable. At $0.10 a kW/hr it doesn't make sense for me to buy an S11. I will never make back my initial investment.

But there will come a time that BTC mining will become less and less profitable even for the big guys. At that time people will stop investing in SHA256 ASICs and put their investment dollars elsewhere. As that happens the diff rate will begin to drop. At some point there will be an equilibrium when the diff rate will be roughly constant.

Ultimately if it's not profitable to mine; and no one mines; then the coin fails.

[Crytptohack]

I think the short answer is no one knows. I have my doubts because the miners are currently collecting the BTC reward and the transaction fees.

Once the last block is mined at 21M, the miners will only be collecting the fee as there is no additional BTC reward as it has reached it's cap.

How much will energy cost at that time? No one knows.
How much will the transaction fees be at that time? No one knows.

So it is anyone guess if it will be economical or not. IMO, it will not be. If the fees are high on BTC, people will use other cryptos. If the miners are not collecting enough fees, they will most likely close down. (Large mining farms)  There will still be people that mine and maybe some facilities will be setup with solar?

[mayo2u]

I think the short answer is no one knows. I have my doubts because the miners are currently collecting the BTC reward and the transaction fees.

Once the last block is mined at 21M, the miners will only be collecting the fee as there is no additional BTC reward as it has reached it's cap.

How much will energy cost at that time? No one knows.
How much will the transaction fees be at that time? No one knows.

So it is anyone guess if it will be economical or not. IMO, it will not be. If the fees are high on BTC, people will use other cryptos. If the miners are not collecting enough fees, they will most likely close down. (Large mining farms)  There will still be people that mine and maybe some facilities will be setup with solar?

Regardless of the prices and diff rate it must be profitable else no one will be mining. And if no one mines then there aren't any transactions and the coin will fail.

An equilibrium will be reached and it will be profitable for those mining but there won't be enough money involved for new miners to want to enter the field.