The electricity-cost math: a formula you can run yourself
Mining profitability calculators are everywhere online, and most of them quietly make optimistic assumptions on your behalf. This guide does the opposite: it teaches you the one formula that matters, with clearly labeled placeholders, so you can run it with your numbers. We won't give you an electricity rate or an earnings figure, because yours are the only ones that count.
The formula
Here it is — the daily electricity cost of running mining hardware:
daily cost = power draw (kW) × 24 hours × YOUR rate ($/kWh)That's it. Three inputs. Power draw in kilowatts, times 24 hours, times what you actually pay per kilowatt-hour. Multiply by 30 for a monthly figure. Everything else in mining economics is commentary on this equation.
Let's label the variables so the rest of this guide is precise:
- P = power draw of your setup, in kilowatts (kW), measured at the wall
- R = your all-in electricity rate, in $/kWh — your rate, from your bill
- Daily cost = P × 24 × R
Finding P: your actual power draw
P is the total watts your mining setup pulls from the outlet, divided by 1,000. The honest way to get it is a plug-in power meter (a cheap wattmeter between the wall and the rig) while the machine is mining at its normal settings. Spec sheets list "typical" draw, but real draw depends on your configuration, ambient temperature, fan speeds, and power supply efficiency — measured beats printed.
Two things people forget to include in P:
The power supply's inefficiency. A power supply rated 80% efficient wastes 20% of what it pulls as heat — you pay for what comes out of the wall, not what reaches the chips. Your wattmeter already captures this; a spec sheet may not.
Everything else that runs because of the miner. Extra fans, ventilation, a dedicated air conditioner fighting the heat in summer — all of it is mining cost. In warm climates, cooling can add a meaningful fraction on top of the rig's own draw. Be honest about this or the formula lies to you.
Finding R: your real rate per kWh
R is where most DIY calculations go wrong, because the number on the utility's marketing page is rarely what you pay. To find your true all-in rate:
1. Take a recent bill. Divide the total amount you paid by the total kWh used. That single number — dollars per kWh, everything included — is your starting R. It captures generation charges, delivery charges, taxes, and fixed fees blended together.
2. Check for time-of-use pricing. Many utilities charge different rates by time of day or season. Mining runs 24/7, so you can't cherry-pick the cheap hours — but you can get burned by the expensive ones. If your utility has peak pricing, your mining load will spend part of every day in the expensive tier. Weight your rate accordingly, or use the blended bill-division method above, which handles it automatically.
3. Watch for tiered rates. Some utilities charge more per kWh as usage rises. A mining rig running around the clock can push your whole household into a higher tier — meaning the rig's marginal cost is the top-tier rate, not your average. If your bill shows tiers, R for the miner is the rate of the tier it lands in.
4. Don't forget demand charges. Some tariffs add a charge based on peak draw; a miner's flat load is usually kind to these, but check your bill.
The rule: R is what an extra kWh actually costs you, not the advertised generation rate. When in doubt, the total-bill-divided-by-total-kWh method is the honest one.
The breakeven question
Once you have your daily cost, the question is whether the mining revenue covers it. Revenue depends on the coin's price, the network difficulty, your hardware's hashrate, and pool fees — all of which move constantly. Rather than giving you a number that will be wrong by next week, here's the framework:
daily profit (before hardware cost) = daily mining revenue − (P × 24 × R)For "daily mining revenue," use a reputable mining calculator with current difficulty and price, and mentally discount it — calculators show a snapshot, and difficulty tends to rise while prices swing both ways. Then compare against your daily cost from the formula above.
And remember the second half of the economics: the hardware itself. If a machine costs H dollars and nets D dollars per day after electricity, it takes H ÷ D days to pay for itself — if conditions never change. They always change.
Common mistakes that flatter the math
Using the sticker rate instead of the all-in rate. The classic. "Electricity is 8 cents!" — plus delivery, plus tax, plus the tier the rig pushed you into. Always use the bill.
Forgetting the hardware cost. "It makes $2 a day after power!" on a $2,000 machine is a 1,000-day payback before difficulty moves. Revenue minus electricity is not profit until the hardware is paid off.
Assuming today's difficulty and price persist. They won't. When a coin's price rises, more miners join, difficulty rises, and your share shrinks. Model the pessimistic case, not the current one.
Ignoring heat. A kilowatt of mining is a kilowatt of heat in your space. In summer that heat has to go somewhere, and moving it costs money. In winter it's "free heating" only if you'd have heated that room anyway.
Counting on resale value. Used mining hardware depreciates with profitability. If mining stops paying, everyone sells at once, and prices crater. Don't bank the resale.
Run it before you spend
The whole point of this guide: P × 24 × R, with your P from a meter and your R from a bill. If the result is already uncomfortably close to plausible revenue, that's your answer — and it's cheaper to learn it from arithmetic than from a credit card statement.