Ethereum: understanding of mathematics behind the calculators of mining profitability
As blockchain enthusiasts, we are always curious about the inner operation of cryptocurrencies such as Ethereum. An aspect that is crucial for anyone interested in the calculations of the profitability of the mines is to understand how they work. In this article, we will immerse ourselves in mathematical concepts behind mining calculators such as those you mentioned.
What are mining calculators?
Mining calculators provide a simple and accessible way to calculate the profit expected by the Ethereum mining or other cryptocurrencies. They take into account various factors such as block reward, transaction commissions, level of difficulty and more. The goal is to give the miners an idea if they derive a profit by investing their calculation power.
Basic calculations
To create your mining calculator, you need to understand the basic calculations involved. Here are some key concepts:
- Block reward
: Each block on the Ethereum network contains 6 new ether (ETH) as a reward for miners who successfully resolve the Mathematical Puzzle complex known as “Proof Of-Work” (POW). The block reward is set at 50,000 ETH per block.
- Transaction commissions : The transaction commissions are deducted from the total amount spent by users in each transaction. For example, if a user sends 10 Eth to another user, he will pay a commission of $ 1. In Ethereum, the transaction commissions range from 0.0005 to 4.50 Eth per transaction.
- Energy costs : Energy costs associated with mining are the main limiting factor for profitability. As electricity prices float, the miner’s energy cost will increase or decrease accordingly.
Mineral calculating formula
To calculate the expected profit using a mining calculator such as the one you mentioned, you can follow these steps:
1
2
3
4
- Repeat the 3-4 steps for multiple blocks to calculate the expected profit.
Example of mathematical formula
Let’s take an example with a block reward of 50,000 ETH (n = 1), a transaction commission of $ 0.002 per transaction (x = 10000 transactions) and an estimated energy cost of $ 0.15/kWh:
`Markdown
Profit provided for block:
$ 50.000 (block award) - $ 2 (transaction taxes) = $ 49,998
Energy cost: take 1 kWh ≈ $ 0.12
Average energy consumption: $ 0.12/kwh \* 10^6 kWh/year ≈ 120 kW-hr
Profit expected per hour: $ 49,998 / 8760 HR ≈ $ 5.67 / hour
Example of Google's calculation sheets
To create your Google calculation sheet, you can use the following formula:
= ((50,000 x 6) – (2 x 10,000)) ÷ 12000`
This formula calculates the expected profit for blocking by subtracting the transaction commissions from the total block reward and therefore dividing the energy cost.
Tips and variants
- Use a different calculation method if you prefer. For example, it is possible to calculate the expected profit based on the number of extracted transactions or blocks.
- Consider factors such as electricity costs in your region during the calculation of energy costs.
- You may want to add further columns for the level of difficulty of the block (i.e. difficulty -based calculations), which involve more complex mathematical concepts.