June 02, 2022 - 32 min read
Bitcoin Cash (BCH) is a fork of Bitcoin that was launched in 2017 in order to make payment transactions faster and cheaper. The BCH fork split the original Bitcoin blockchain in two, generating a new asset, Bitcoin Cash. Another hard fork split Bitcoin Cash into two more new currencies, Bitcoin ABC and Bitcoin SV, though these were significantly less successful than Bitcoin Cash. As of late Q2 2022, Bitcoin Cash had a market cap of $3.7 billion, placing it as the 24th largest cryptocurrency by market cap.
Bitcoin Cash is different from regular Bitcoin (BTC) in a few ways. Particularly, the block size can be larger, allowing more transactions to be processed at once and reducing fees. Bitcoin Cash can typically confirm eight times as many transactions as Bitcoin in the same block. However, the large block size of BCH can make storage, audit operations, and node storage more challenging. Like Bitcoin, BCH works on a proof-of-work consensus method and can be mined just like traditional Bitcoin. Also, like Bitcoin transactions are confirmed every 10 minutes. And, just like Bitcoin, Bitcoin Cash is limited to 21 million coins, with block rewards being halved at specific intervals.
Because Bitcoin Cash is less well-known than Bitcoin, it can potentially offer a more profitable mining opportunity, particularly for smaller miners. In this article, we’ll review everything you need to know before starting to mine Bitcoin cash, including the potential profits that can be made from mining Bitcoin Cash, and whether solo mining, pool mining or cloud mining will be the best option for your individual situation. We’ll also review the best mining pools, cloud mining sites, and the best mining hardware and software, as well as provide some additional advice about starting your Bitcoin Cash mining business.
There are a variety of factors to take into account when considering whether mining Bitcoin Cash will be a profitable venture for your individual situation. Ask these questions to determine whether mining BCH is right for you and if it could be a profitable venture.
Just like in traditional Bitcoin mining, each miner competes to be the first to solve a series of increasingly difficult, randomized mathematical problems in order to earn the right to “mine” or validate the next block, and earn the block reward. Computers with higher processing power are the most likely to win the block reward.
After certain periods, mining rewards are halved. This occurs every 210,000 blocks or about every 4 years. For example, in May 2020, the reward for mining a block was halved to 6.25 BTC from 12.5 BTC. The next block halving is expected to occur in May 2024 and will reduce the block rewards from 6.25 BTC to 3.125 BTC. In addition to block rewards, miners earn transaction fees which BTC users pay when they transfer funds from one wallet to another.
Like any cryptocurrency, Bitcoin cash is volatile, and the price and volatility of BTC will directly influence the profit a miner can earn. Unfortunately for potential miners, the price of Bitcoin Cash isn’t nearly as high as it used to be. Directly after the fork, Bitcoin Cash’s price was initially relatively high, $3,160, and has consistently fallen since then, with a few smaller spikes. For instance, in May 2021, during what many refer to as “DeFi Summer” the price spiked to $1,399.22. In May 2022, the price of Bitcoin Cash hovered around $246, representing a more than 92% reduction in price in the 12 months from May 2021 to May 2022.
Notably, Bitcoin Cash did not experience a big spike in price during November 2021, when Bitcoin reached its all-time high of more than $69,000. A reduction in the price of Bitcoin Cash means that, for every block reward, users will gain fewer U.S. dollars. Most prediction counters are mildly bullish on a slow increase in the price of Bitcoin Cash over the near year or two but do not expect it to reach its previous highs again for several years, if ever. However, this may be good for new Bitcoin Cash miners, as a lower price may lead it to be less attractive to other miners, meaning there will be less competition, making it easier to mine blocks with less processing power.
It can be very difficult to determine the minimum startup costs for a Bitcoin Cash mining operation, however, most people recommend at least $12,000 to $15,000 for your hardware alone, as a bare minimum. Of course, the more money you put towards hardware, the more likely you’ll be to win a mining reward. The more rigs you have, the higher hashrate, or computational power per second, you will be able to achieve.
Calculations vary, but according to crypto mining website CoinWarz, 140.00 TH/s, (trillions of hashes per second) is the minimum one needs to begin mining Bitcoin Cash profitably in 2022.
This can be achieved by one machine or multiple machines. For example, the upcoming Bitmain Antminer S19 XP, which costs between $15,000 to $25,000 per machine, can achieve 140 TH/s on its own. Alternatively, you could purchase 10 Antminer S9is, which each provide 14 TH/s, leading to a cumulative 140 TH/s. Each of these machines is currently selling on Amazon for $1,039 each. Different miners may be more or less efficient, and therefore use more or less power, so machine efficiency is another important factor to calculate into your Bitcoin Cash mining process.
Costs, however, are not limited to hardware, since electricity costs, taxes, and other expenses must be taken into account. If you are mining outside your home, or your mining operation is especially large, there are also rental/leasing costs and the costs of business insurance, cooling equipment, and maintenance to consider.
Taking the example of the U.S., the average energy cost in the United States is 10.42 cents per kilowatt-hour. However, this varies significantly between areas and states; for instance, average energy costs in Hawaii are more than 27 cents per kilowatt-hour (sometimes ranging up to 35 cents per kilowatt-hour, while in Utah are around 8 cents per kilowatt-hour. However, it should be noted that since crypto miners try to set up their operations in areas where energy costs are lower, they pay an average of 5 cents per kilowatt-hour.
Bitcoin and Bitcoin Cash ASICs’ energy consumption are measured in kilowatts, not kilowatt-hours. To convert a kilowatt to a kilowatt-hour, we need to divide by 1,000. If a miner is running 24/7, we then need to multiply its kilowatt-hours by 24. For example, the AntMiner Bitmain S19 Pro 110 TH/s Bitcoin Miner, which starts at a price of $10,389 on Amazon, utilizes 3250 watts, or 3.25 kilowatt-hours. 3.25 multiplied by 24 hours equals 39 kilowatt-hours per day. At a price of 10.42 cents per kilowatt-hour, this would mean an energy expense of $4.06/day.
To calculate the potential profitability of your Bitcoin Cash mining operation, you should use a calculator (we’ll mention some of the best calculators below). Let’s take the example information above to make a sample calculation.
If a miner has a have a 140 TH/s ASIC utilizing 3250 watts at 10 cents a kilowatt-hour, and has a 1% maintenance fee, they would earn approximately $11.33 in BCH per day at BCH’s current price ($4,135 in revenue per year).
If we drop the energy price to 5 cents per kilowatt-hour, that goes up to $15.56 ($5,679 in revenue per year). An ASIC, on average, if well maintained, will last 2.5 years before it needs to be replaced. This would mean that, in the first scenario, revenue would be $12,145 and in the second scenario, revenue would be $14,198. This would be a very small operation, and could easily be done at home, so for this example, we will not calculate any rental costs. If the mining equipment costs $12,000, we can safely say that, with today’s price of BCH, small-scale solo mining is not a profitable bet.
However, if the Bitcoin Cash price trends upward, this could change significantly. For example, if the BCH price were to double (and remain steady), revenues from the same mining operation would spike to $35 per day (more than $12,700/year), meaning that it would take around 1 year to repay the initial mining equipment. For the remaining 1.5 years of the operation, the miner would generate around $19,000 in revenue), giving the project a 62% profit margin over 2.5 years, if divided by each year, about a 20% retroactive return per year.
This does not take any ASIC downtime or problems into the calculations, so potential miners should consider that real revenues might be 10-15% lower than the calculations above.
In contrast, if Bitcoin Cash trends downward, it could take significantly longer for a miner to repay their initial investment, which could make mining Bitcoin Cash a much less profitable endeavor.
When looking at your potential startup capital, and making various required calculations, you should attempt to determine whether it’s better to set up your own mining operation or to join a pool. Joining a pool is often better for smaller miners, who may find it more profitable, as they have a higher chance of gaining the next block reward by combining their hashing power with hundreds or thousands of other miners across the country or across the world. However, fees can sometimes be steep, so it’s essential to compare your potentially increased profits with the pool fee, which will increase your expenses.
However, if you find that mining solo or joining a pool is simply too time intensive or expensive, you can always enter a mining contract with a cloud mining service. A cloud mining service does everything for you, so you will not need to operate any of your own hardware or software. Despite these benefits, you are investing your capital into someone else’s business, so you have no control over how they conduct their mining operation. Therefore, you’ll want to be extremely careful to only invest in cloud mining operations with a great reputation and a strong track record of delivering profits to their clients.
On the other end of the spectrum, if you are planning to set up an especially large mining operation and have an entrepreneurial spirit, you may also want to consider creating your own mining pool. This will have its own costs, including advertising and marketing your operation to other potential Bitcoin Cash miners online, as well as potentially requiring additional software to create your mining pool.
Determining the profitability of mining Bitcoin Cash can be difficult on your own, so you should ideally use a calculator to run a profitability estimate. Most Bitcoin Cash mining calculators will focus on 4 major factors; mining hashrate, power consumption in watts, electricity costs in dollars per kilowatt hour (kWh), and mining/pool fees (which may or may not be relevant). Here are a few of the best Bitcoin Cash mining calculators that you may want to use:
Before you commit to mining Bitcoin Cash, you should consider other crypto mining options to make sure that mining Bitcoin Cash is the best crypto mining option for your particular financial goals. Other common mining options related to Bitcoin Cash include traditional Bitcoin, Litecoin, Bitcoin SV, and ETH.
Mining Bitcoin vs. Bitcoin Cash
Using the same calculations as the example in the paragraph above, in today’s market, mining traditional Bitcoin is actually slightly more profitable than mining Bitcoin Cash, with, all other factors held steady, a cost of 10 cents per kilowatt-hour yielding a revenue of $12.51/per day ($4,566/year) and a cost of 5 cents per kilowatt-hour yielding a revenue of $16.74/day ($6,110).
Like the previous calculation, this calculation does not measure any ASIC downtime or repairs, so in all likelihood, Bitcoin mining is slightly less profitable than the numbers represented above.
Mining Ethereum vs. Bitcoin Cash
Ethereum has long been a popular mining alternative to Bitcoin, Bitcoin Cash, and other cryptos in the Bitcoin family. However, in today’s market, mining Ethereum may not be a great option, since Ethereum is switching to a proof-of-stake consensus model which will make traditional mining obsolete. However, instead of mining, you can stake Ethereum in order to obtain staking rewards. To run an ETH validating node, you will need to stake at least 32 ETH, which as of early May 2022 was slightly more than $75,000. Alternatively, if you have less ETH or don’t want to run a node yourself, you can stake your ETH into a staking pool, which will take care of nearly everything for you. Lido, Stakewise, and Cream Finance are common staking pool options, though you can compare many staking pools at once on websites like StakingEther.com.
In order to store your Bitcoin Cash from your mining operations, you will need a BCH-compatible wallet. You will need a “hot,” internet-connected wallet in order to interface with your mining software, however, you can later transfer your funds to a “cold” hardware wallet in order to provide an extra layer of security.
Some of the best Bitcoin Cash wallets on the market today include:
If you want to mine a little Bitcoin Cash as a hobby, you may be able to get away without officially starting a business. In most states, you do not have to file to have a sole proprietorship, so if you are only investing a few thousand dollars or engaging in cloud mining, it may not be worth taking the time to set up a business.
However, if you are planning to invest $10,000, $20,000, or more into a Bitcoin Cash mining business, setting up an official business is essential, both for legal and tax reasons. You will typically want to incorporate as either an S-Corporation or an LLC (limited liability company). Your choice will typically depend on your state, the size of your business, and if you plan to work with or employ other people. You will want to check with an experienced lawyer or accountant in order to determine the best course of action.
Incorporating your business will typically allow you to take business deductions against your federal income taxes. Since cryptocurrency mining is capital intensive, and you may not make your money back until one year or more of continuous operations, if you incorporate, you will likely be able to take extremely large income tax deductions until your mining operation becomes profitable.
In addition, if you decide to start a larger operation, such as a mining facility located in an office or warehouse, you may want to get insurance, both to protect yourself from liability (for example, in case an ASIC overheats and causes a fire), and to protect yourself from other risks, for instance, if a break-in or natural disaster damages or destroys your equipment. In general, you will need to be incorporated in order to purchase business insurance, so this is another reason why incorporation is essential for larger BCH miners. Incorporation and insurance, including workers comp insurance, will be essential if you hire any employees or contractors to help you out with your operation.
In addition to incorporation and insurance, you will want to make, at the very least, a basic spreadsheet of all expenses and revenues that your accountant or bookkeeper can later process for tax purposes.
It should also be noted that, if you don’t have the startup capital to set up a Bitcoin Cash mining operation yourself, you may be able to get financing via a crypto mining loan. Companies like BlockFi specialize in providing loans specifically for crypto miners. Specifically, BlockFi can provide a loan secured by your mining equipment.
If you have crypto, but don’t want to sell it, and also want to set up a mining operation, you may also be able to get a crypto-collateralized loan from a company like Salt Lending, which allows you to use your Bitcoin or other cryptocurrencies as a downpayment for loans.
Another company, Pipe, specifically exists to provide revenue-based loans to Bitcoin and cryptocurrency miners. It recently partnered with another firm, Compass Mining, which sells ASICs and other hardware products, in order to provide financing for new Bitcoin mining operations.
There are, of course, more traditional types of loans, from banks or the Small Business Administration (SBA) that miners may be able to achieve, but due to the exotic nature of cryptocurrency mining, it may be very difficult to achieve financing from more traditional sources.
Other than setting up your business plan and calculating your potential profitability, choosing the right Bitcoin Cash mining GPU/ASIC is perhaps the most important choice you can make. Larger ASICs are generally far more energy-efficient in terms of TH/s per watt or per kilowatt-hour, however, they can be expensive, so beginning miners may want to stack a few smaller ASICS together to achieve a decent amount of mining power if they cannot afford larger and more efficient hardware.
Here are a few of the best Bitcoin Cash Mining ASICs– some are designed for larger miners, while others are better for micro-mining operations.
In addition to your ASIC, you will need the correct software, as well as other hardware, such as a power supply unit (PSU), and cooling equipment, particularly for large operations, which we will touch on later.
Almost equally important to your choice of Bitcoin Cash mining ASICs is your choice of power supply unit (PSU). Unfortunately, finding the correct PSU can be one of the most difficult parts of setting up your operation, and PSUs rated above 3000 to 4000 watts can be both expensive and difficult to find.
Due to the heavy power requirements of ASICs, you will often need multiple PSUs if you have a large mining operation, but you can often get away with one or two for a smaller operation. You can easily purchase and use a splitter to use one PSU to power multiple ASICs. If you understand what you are doing, you can also connect multiple PSUs to one ASIC in order to save money, but this could be slightly riskier. This can often be achieved by using a 24-pin ATX PSU splitter cable.
You will want to make sure that your PSU or PSUs are is rated for at least 20-30% more than the amount of wattage your ASICs will use. For example, if your ASIC uses 750 watts, you will likely want a PSU rated for at least 1000 watts.
You may also want to consider getting a smart power supply, which will allow you to remotely monitor the power supply wattage and temperature levels. This will also allow you to intelligently add or upgrade components to your rig as your power supply needs change.
Some of the best Bitcoin Cash mining PSUs on the market today include:
As we just mentioned, in addition to having the correct hardware, you will also need to have mining software that integrates with your hardware to run the mining process, monitor your progress, and display your profits. No matter what software you use, you will need to make sure that it’s compatible with the hardware that you plan to use. If you plan to join a mining pool, the software will sometimes, but not always be integrated with the mining pool.
Some of the most popular software options for solo and pool mining include:
CGMiner: CGMiner is a free, open-source mining software option. While it’s mainly designed for Bitcoin mining pools, it can also be used for solo mining. Unlike many other mining software options, users can independently distribute their mining power to different pools to find the most profitable combination.
EasyMiner: EasyMiner is another free, open-source, and highly-secure mining software option that can be used to mine Bitcoin, Litecoin, and Bitcoin Cash. Its open-source nature means that advanced users can customize it to their own specifications. However, it’s also great for beginning users. EasyMiner is known for its strong community support. It can be used for solo or pool mining.
BFGMiner: BFGMiner is a modular ASIC/FPGA Bitcoin and Bitcoin Cash mining software option for both solo and pool miners. While highly effective, it’s not as user-friendly as other options and is generally recommended only for advanced users.
Once you have purchased your BCH mining hardware (ASICs), you will need to set them up properly. As you’ve probably heard, ASICs consume significant amounts of energy and create a lot of heat. Therefore, you’ll need to make sure your setup is adequate, which gets exponentially more important as your operation grows larger.
In particular, you will need:
After ensuring that you have all of these components, take the following steps to set up your BCH mining operation.
Click here for a more detailed setup guide from CryptoDefinitions.com.
ASICs are known to run hot, so cooling may be an important factor, particularly if you plan to run a large crypto mining operation. The cooler the ASICs, the longer they will last and the lower chance they have of melting down, which will cause them to cease to function altogether. The main goal of cooling your mining operation get the most cooling at the lowest cost. For this reason, a room or building used to mine Bitcoin Cash should typically have great air conditioning, and if you are deciding upon different locations to start your business, you may wish to choose a location in an area with a cooler climate.
There are two main ways to cool your Bitcoin Cash mining hardware; air cooling and immersion cooling. The air-cooling method is the most common method, which uses large ventilation fans to move hot air away from your ASICs.
In contrast, immersion-cooled mining operations utilize special liquids and circulation pumps designed to cool electronics. Liquid has greater heat transfer capacity than air, making it better for cooling, with some estimating that liquid cooling systems can be up to 1,200x more efficient than air cooling systems.
In addition to increased efficiency, immersion cooling will make your ASICs last longer and can even increase their effective hashrate, potentially leading to more profits. This type of cooling also reduces the need to constantly clean your ASICs since there will be no air pollution or dust interacting with the submerged ASICs. Plus, immersion cooling can be combined with specifically designed barriers that will significantly reduce the noise of your rigs, which is important if you are mining in an apartment, office building, or industrial park where excess noise could disturb your neighbors. A final benefit of immersion-cooling is the fact that excess heat from ASICs can be repurposed to heat a home or swimming pool (for home-based mining operations).
However, it should be noted that immersion cooling has some downsides. The immersion-cooling setup process is much more expensive than air-cooling systems, so it’s typically ideal only for the largest and most sophisticated mining operations. There are different types of liquids that may or may not be compatible with different types of hardware, so you will need a bit of technical know-how to understand which liquids work with which ASICs. Immersion cooling also requires a delicate and exacting setup of the pumping mechanism to ensure that the ASICs are cooled sufficiently. Finally, it can be extremely difficult and tedious to move ASICs that are immersion-cooled, as this will require a delicate cleaning of all the immersion fluid from the ASIC before it can be relocated.
For most smaller miners, joining a Bitcoin Cash mining pool can be more profitable than mining on your own. Specifically, a miner is much more likely to validate a block if they have the higher hashrate that can be achieved by combining the power of a group of smaller rewards. This is particularly important in today’s mining landscape, where individual miners are attempting to compete with massive mining operations with incredibly large hashrates. Despite the benefits of pooled mining, participants in a mining pool will only receive a portion of the block rewards, and must also pay a pool fee, which often varies from between 1% and 4%.
When joining a mining pool, you should consider a variety of factors, including the aforementioned pool fee, the minimum hashrate threshold, the pool’s reputation, and the exact terms of conditions of the pool.
In general, miners can earn rewards from mining pools in three different ways:
While mining Bitcoin Cash– either solo or with a pool, can be a profitable endeavor, it’s not for everyone. Some potential miners may not have the startup capital to purchase $12,000 or more in ASICs and associated hardware, or may not have the time or inclination to maintain the hardware to ensure it operates safely and effectively. However, just because you don’t want to be a traditional miner doesn’t mean that you can’t profit off of the Bitcoin Cash mining process. To do this, you can join a cloud mining website, which allows you to invest cash upfront in exchange for the rewards of someone else’s mining pool. Typically, this comes in the form of investing in a mining contract for a set period of time.
Since you don’t own the ASICs and the hardware, this gives you the least control of the mining process, so you’ll want to be very careful about what cloud mining site you use since scams abound. If you don’t like a mining pool, you can always disconnect your ASIC and join another, however, if you pay a cloud mining site, you will probably not be able to get your money back.
Some of the best and most popular Bitcoin Cash cloud mining sites today include:
If you’ve already started to mine Bitcoin Cash, you might already have acquired a small– or substantial, amount of BCH. You may decide to transfer your BCH to an exchange and sell it immediately to get cash, or you might want to hold it if you believe it will appreciate it. You may also want to swap it with another cryptocurrency, or multiple cryptocurrencies, that you believe will appreciate in the future, or that you want to actively trade.
However, one of the best ways to increase your returns on your Bitcoin Cash is to lend it out for interest. It’s important to realize that if you put your Bitcoin Cash on a platform for lending, it will not be FDIC insured and you could lose your funds, therefore, you might want to consider only lending out a certain portion of your BCH and selling or swapping the rest.
Some of the best places to earn interest on your Bitcoin Cash include:
Bitcoin Cash mining can be a great business opportunity, but it isn’t for the faint of heart. High startup costs, significant financial planning, technical know-how, and a decent amount of startup capital are all required to make a Bitcoin Cash mining venture a success. With prices in the crypto market extremely volatile, it currently (as of Q2 2022) may be more lucrative to mine traditional Bitcoin or other cryptos (such as Litecoin), which is something that potential Bitcoin Cash miners should consider– however, prices are always changing, so this trend could reverse in the near future.
After doing our research, we can also confidently say that unless you are planning a large BCH mining operation, you can probably make more signing up for a cloud mining service than ever touching an ASIC yourself. This is due to the incredible hashing power of large crypto mining operations, which makes them many times as efficient as solo miners. However, if you are committed to purchasing and owning your own ASICs, you should most likely join a large mining pool, and consider a pay per share (PPS) or pay per full share (FPPS) revenue structure, which will likely increase the regularity and amount of your profits.
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