The two largest crypto coins provide some of the best opportunities to earn income within crypto. Bitcoin has been majorly known for the popular passive income system mining. Ethereum, which initially used a PoW system almost akin to Bitcoin, recently traversed to a less power-hungry consensus system called PoS, or for the commoners, staking. 

Both of these systems are efficient in their ways and making. Indeed, owing to their efficiency, mining, and staking have attracted hundreds of thousands of participants, if not millions, already.

Despite both systems being great, there must be one with better short- or long-term yields. This guide looks at that. 

Ethereum PoS

Before delving any deeper, it’s important to establish that every calculation now relies on Ethereum and Bitcoin’s prevailing prices at the time of writing. Ethereum is trading at $1.9k at this very minute, possibly heading to $2k.

To begin working as a validator for the Ethereum network, an individual must start by staking a large amount of Ethereum, 32 ETH to be precise. This is a considerable sum for smaller investors since it requires an initial investment of about $60.8k.

This amount allows the staking party to run a validator node, which can kickstart their journey into being a key component of the Ethereum network. So, how much Ethereum, or dollar value, does a validator in this network earn?

Based on reports, in the very early days, users would only earn an APR of about 22.7% every year. However, this was in the early days when the beacon chain was just launched, and Ethereum 2 started circulating.

Over the years, the annual rate has been reducing speedily, from the 22.7% high to a mere 7.5% high in 2023. Other reports indicate that the APR in staking Ethereum ranges between 4.2% and 7.3% in 2023.

As soon as Ethereum 2 was fully adopted, the number of validators increased speedily. Between Jan and June 2023, the number of validators rose from about 490k to 790k. This is an increase of about 400k validators in merely six months. This increase caused a sharp decline in Ethereum’s profitability.

Smaller stakes earn small APY based on reports. Those that gain large amounts leverage MEV bots. So, how does Ethereum’s PoS profitability compare to commoners like Ethereum Bitcoin mining? Let’s see. 

Bitcoin mining profitability

When the father of cryptocurrency, Satoshi Nakamoto, launched Bitcoin, he never intended to provide some ‘get quick money schemes.’ Instead, as established above, Satoshi Created a system that involved hard work before getting Bitcoin. This system of hard work is what is popularly known within the crypto scene as Bitcoin mining.

Bitcoin mining is a system involving solving severely complex algorithms, impossible for even high-IQ humans. The cryptographic algorithms are solved using top-tier computing devices. Well, a phone is a computing device capable of mining Bitcoin, but it’s inefficient. In fact, with the great difficulty in the Bitcoin network, you cannot mine the coin with a simple phone. 

A Laptop or Desktop is an exemplary computing device. Depending on its specs and the availability of Graphic Cards, these machines can mine Bitcoin. But again, just like phones, you don’t get back your value while mining using desktops and laptops. 

In simple terms, many computing devices are designed to be capable of mining Bitcoin, but only some are efficient. The efficient Bitcoin miners are called ASICs. ASICs are application-specific integrated circuits and systems designed to complete specialized tasks. As we explore the profitability of BTC mining, we will focus mainly on the productivity of ASICs.

So, what is ASIC’s profitability?

Calculating the profitability of Bitcoin mining includes looking at factors such as Revenue, machine purchase costs, and operation costs. Essentially, any calculation of profits considers the investment against the average Revenue. 

Antminer S19 Pro has been praised as one of the best Bitcoin mining products in the market. The miner has a hash rate of 110 Th/s and leverages about 3250W of power every other minute.

Reports suggest that, on average, the electricity costs in the US stand at 23 cents per kWh. The global average stands at just about $0.159. As such, a report by mining listing earlier this year indicated that the average cost of running a single S19 pro is just about $11.7. 

Coupling all these data suggest that, on average, a Bitcoin miner can mine just about 0.00000604 BTC translating to $0.18.

BTC profitability. Source: Nicehash

Being the best Bitcoin miner, the Antminer S19 Pro provides higher profits than all others, including AvaloMiner, and Whatsminer.

At the moment, mining Bitcoin is not a profitable activity. The costs outweigh the short-term benefits. However, as BTC continues to recover, investors will realize the benefits of holding BTC.

As the difficulty of mining BTC increases, other factors have made it hard for investors to profit from BTC successfully. The rising costs of power and the mining congestion.

A report by Yahoo Finance in April showed that now, more than ever, there are more dormant BTC. About 10.2 million BTC continues to remain locked in wallets. This tendency to store BTC for long terms has been known as hodling. 

Miners alike practice the hodling of their BTC stashes, hoping to earn more value in the future. Hence, while the profits of BTC mining might be miniature now, holders will realize the gains of hodling in the long term. 

Bitcoin mining vs Ethereum Staking

After comparing the profitability of the two popular crypto activities, it’s great to conclude that, at the moment, Ethereum staking is more profitable. The fact that Bitcoin miners do not even break even with their daily costs proves that Ethereum is more profitable.

Ethereum stakers APY is the profit per annum, which includes all costs. However, this only happens when you only focus on short-term profitability. 

Bitcoin miners who immediately convert their coins after mining could suffer losses. However, it’s true that many Bitcoin miners mostly use the asset as a long-term investment.

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