Machines need electricity. Buildings need cooling. Equipment needs people who know how to keep it running.
So before you get excited about hashrate, ask the obvious question: where does the money come from?
Two sources, one reward
Every valid block must start with a special transaction called the coinbase transaction. Do not confuse it with the company called Coinbase. This transaction is where the miner claims its reward. The claim can be no more than the allowed subsidy plus the fees from the block’s transactions. The subsidy is new bitcoin created with the block. Creating new bitcoin this way is called issuance. Fees are existing bitcoin paid by the people sending transactions.
Keep these two sources separate in your mind. The subsidy follows a fixed schedule. Fees do not. They depend on the transactions in each block.
The halving changes the subsidy, not the speed of the fans
The subsidy halves every 210,000 blocks. The rule counts blocks, not calendar dates. A block’s height is its position in the blockchain, counting up from the first block. For heights 840,000 through 1,049,999, the subsidy is 3.125 BTC. At height 1,050,000, it becomes 1.5625 BTC.
The halving rule does not cut transaction fees. It also does not make a machine perform half as many hashes. The subsidy part of each block’s reward drops, but the costs of running the machines do not drop with it.
A bigger slice of a changing pie
Here is a simple way to think about it. Your portion of the network’s total hashrate is roughly your portion of the chances to find a block. But the total reward changes as fees and issuance change. Your portion also changes when other miners add or remove hashrate.
Then there are pool payout rules, rejected work (results the pool did not accept), electricity and other running costs. A strong hashrate number is only one part. It cannot tell you whether the business makes money.
This is why a small fault deserves attention
Take a fictional 200 TH/s machine that loses 50 TH/s. While that fault lasts, one quarter of its possible attempts are missing. If nothing else changes, getting those 50 TH/s back raises the amount of bitcoin the machine is expected to produce.
This is a real contribution a technician can make. It still does not guarantee a profit. Equipment efficiency, operating costs and market conditions all still matter.
Optional reading for this lesson
Continue your study
Reading for this lesson
A guide to mining operations.
Further study of the operating variables.
Reference for subsidy rules.