Bitcoin has been making waves since July, breaking through the $11,000 mark for the first time and reaching an 11-month high. As BTC prices surge, bitcoin miners are among the biggest beneficiaries. But in this bullish market, how can miners accurately calculate their theoretical output? And how do mining pools actually distribute rewards?
Understanding these mechanics is essential for anyone involved in or considering bitcoin mining. This guide breaks down the math behind mining profitability and explains the dominant reward systems used by modern mining pools.
Understanding Key Concepts in Bitcoin Mining
Before calculating daily theoretical output per terahash (TH/s), it's crucial to understand several foundational concepts:
- Difficulty (D): A measure of how hard it is to find a hash below the target set by the network. As more miners join, difficulty adjusts upward every 2,016 blocks (~every two weeks).
- Hashrate (H): The number of hash calculations a miner can perform per second. Common units include TH/s (terahashes per second).
- Block Reward (R): The fixed amount of BTC awarded for successfully mining a new block. Currently, this stands at 6.25 BTC per block.
When Bitcoin launched, the base difficulty was defined as 1. At that level, roughly $ 2^{32} $ hash attempts were expected to yield one block. Today, with global hashrate soaring, the network adjusts so that at difficulty $ D $, approximately $ D \times 2^{32} $ hashes are needed to mine a block.
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Calculating Theoretical Bitcoin Output Per TH/s
To estimate daily BTC output for 1 TH/s, use the following formula:
$$ P = \frac{H \times R \times 86400}{D \times 2^{32}} $$
Where:
- $ P $ = Daily BTC output
- $ H $ = Hashrate in hashes per second (for 1 TH/s, $ H = 10^{12} $)
- $ R $ = Block reward (6.25 BTC)
- $ D $ = Current network difficulty
- $ 86400 $ = Seconds in a day
Using current figures:
- $ H = 10^{12} $
- $ R = 6.25 $
- $ D = 16,847,561,611,550 $
Plugging in the numbers yields approximately 0.00000746 BTC per day per TH/s.
This value represents the theoretical earnings before fees and pool charges. You can verify this figure using blockchain analytics platforms like BTC.com, which display estimated returns under PPS (Pay Per Share) models — essentially reflecting theoretical output.
Beyond Block Rewards: The Role of Transaction Fees
While block rewards form the bulk of miner income, transaction fees (miner fees) contribute additional revenue. These vary based on network congestion and user willingness to pay for faster confirmations. However, unlike fixed block rewards, fee income is unpredictable and depends heavily on pool performance and settlement model.
This is where mining pools come into play.
Why Mining Pools Are Essential
With over ten million miners competing globally and a new block found only every ten minutes, solo mining is impractical. The odds of an individual miner finding a block can stretch to years — even with multiple ASICs.
Mining pools solve this by allowing miners to combine their hashrate. When a block is found, rewards are distributed proportionally based on each miner’s contributed work.
All major pools now use advanced reward systems such as FPPS and PPS+, moving beyond older models like PPLNS due to better risk distribution and stability.
PPS+ vs FPPS: Modern Mining Pool Settlement Models
What Is PPS+ (Pay Per Share Plus)?
PPS+ offers stable payouts by guaranteeing payment for every valid share submitted, based on theoretical block rewards. Here's how it works:
- Block rewards are paid out deterministically using the expected value.
- Transaction fees are distributed based on actual fees collected by the pool, proportional to your hashrate share.
For example:
- Miner A contributes 10% of a pool’s total hashrate.
- Their theoretical block reward is 10 BTC/day.
- The pool collects 2 BTC in transaction fees that day.
- Ignoring pool fees, Miner A receives:
$ 10 + (2 \times 10\%) = 10.2 $ BTC
However, if the pool fails to find any blocks in a given period (low "luck"), no transaction fees are distributed — though block rewards remain unaffected.
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What Is FPPS (Full Pay Per Share)?
FPPS takes predictability a step further by including both block rewards and transaction fees in the theoretical payout calculation.
Instead of waiting for real fees to be collected, FPPS uses historical averages — typically expressed as a percentage of block reward. For instance, if average fees represent 1.5% of block revenue:
- Miner A’s theoretical reward: 10 BTC
- FPPS payout: $ 10 \times (1 + 1.5\%) = 10.15 $ BTC
The key advantage? No exposure to pool luck. Whether the pool mines zero or five blocks in a day, your payout remains consistent.
While FPPS provides stability, it may slightly overpay during low-fee periods and underpay when fees spike — but overall, it reduces volatility for long-term miners.
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Frequently Asked Questions (FAQ)
Q: What is the difference between PPS and PPS+?
A: PPS only guarantees payment for block rewards per valid share. PPS+ adds transaction fees on top, distributing them based on actual fees collected by the pool.
Q: Is FPPS better than PPS+?
A: It depends on your risk tolerance. FPPS offers more predictable income since both rewards and fees are based on averages. PPS+ gives higher upside during high-fee periods but zero fee payouts if no blocks are found.
Q: How often does Bitcoin mining difficulty change?
A: Every 2,016 blocks — approximately every two weeks — the network adjusts difficulty to maintain a 10-minute block interval regardless of total hashrate changes.
Q: Can I calculate my monthly earnings from Bitcoin mining?
A: Yes. Multiply your daily theoretical output by 30, then subtract electricity costs and pool fees. Use live data on difficulty and price for accurate estimates.
Q: Do all mining pools use FPPS or PPS+?
A: Most major BTC pools now support one or both models. Always check the settlement method before connecting your rig.
Q: Does higher network difficulty reduce my profits?
A: Yes. As difficulty increases, more computational power is required per block, reducing individual output unless you scale your hashrate accordingly.
👉 Access real-time Bitcoin network metrics to optimize your mining strategy
Conclusion
As Bitcoin continues its upward trajectory, understanding mining economics becomes increasingly important. From calculating theoretical output using network difficulty and hashrate to choosing between FPPS and PPS+ reward models, informed decisions lead to better returns.
Modern mining isn't just about hardware — it's about leveraging smart pool strategies and staying updated with network dynamics. Whether you're a small-scale operator or managing large farms, mastering these principles ensures you maximize profitability in any market cycle.
Always remember: while tools and formulas provide guidance, actual results depend on fluctuating variables like BTC price, power costs, and network conditions. Stay analytical, stay adaptive, and mine efficiently.