## Definition

Electricity cost is the amount a miner pays to power mining hardware, cooling equipment, and supporting infrastructure. In cryptocurrency mining, it is usually measured in cost per kilowatt-hour (kWh) and is one of the biggest factors in whether a mining operation is profitable.

## How It Works

Mining machines consume electricity continuously while they calculate hashes and compete to find valid blocks, a process described in the original [Bitcoin whitepaper](https://bitcoin.org/bitcoin.pdf). The more power a machine draws, and the higher the local electricity rate, the more it costs to keep that miner online.

A simple way to estimate electricity cost is:

`power use in kilowatts x hours running x price per kWh`

For example, a miner that uses 3,000 watts is using 3 kilowatts, roughly in the range of many modern ASIC specifications listed by manufacturers such as [Bitmain](https://shop.bitmain.com/). If it runs 24 hours a day at $0.08 per kWh, the daily electricity cost is:

`3 x 24 x 0.08 = $5.76 per day`

That cost must be compared with the mining revenue produced by the machine. If the miner earns $8.00 per day before expenses, the rough profit after electricity is $2.24 per day. If the same miner pays $0.15 per kWh, the daily power cost rises to $10.80, which would make the machine unprofitable before other expenses.

Electricity cost can also include demand charges, time-of-use pricing, grid fees, taxes, and the extra power used by fans, pumps, or air conditioning. Large mining farms often negotiate industrial power rates or locate near cheaper energy sources to reduce this expense.

## Why It Matters

Electricity cost is often the difference between profitable mining and losing money. A miner with efficient hardware can still fail if power is too expensive, while a miner with access to cheap energy may keep older machines running longer.

It also affects risk. Mining revenue changes with coin price, [mining difficulty](/glossary/mining-difficulty), transaction fees, and block rewards, all of which miners can compare against live network data from explorers like [mempool.space](https://mempool.space/). The power bill, however, usually arrives on a fixed schedule. Because of that, miners track electricity cost closely when deciding which machines to buy, when to shut machines off, and how long it will take to reach a break-even point.

## Related Terms

- [Hash Rate](/glossary/hash-rate)
- [Mining Profitability](/glossary/mining-profitability)
- [Break-Even Point](/glossary/break-even-point)
- [ASIC Miner](/glossary/asic-miner)
- [Cooling System](/glossary/cooling-system)