Oct
09
2025
Bitcoin Price History: Price of Bitcoin 2009 - 2021

Bitcoin Price History: 2009 – 2025

By | Cryptocurrency, Growing Wealth, invest, Investing | Comments Off on Bitcoin Price History: 2009 – 2025
This article is part of a series looking at the price histories of cryptocurrencies, including Bitcoin, Ethereum, and Solana. Understanding the past price movements and evolution of major cryptocurrencies can provide key insights into their potential strengths, weaknesses, and broader role within the crypto market.

Analyzing key trends, such their potential for high volatility or reaction to events, may also help crypto buyers and sellers manage expectations and choose strategies that align with their goals. While past performance does not guarantee future results, it may provide important context for making informed decisions and managing risk.

As the most widely recognized and adopted cryptocurrency, Bitcoin’s price can in many ways serve as a barometer for the health of the entire crypto market. With the highest market cap of all cryptocurrencies by a wide margin, it has the potential to lift the prices of other cryptocurrencies in the wake of its own price increases, and likewise pull broader market prices down when its own numbers fall.

The price of Bitcoin (BTC) has been on a wild ride since it launched over 14 years ago, on January 3, 2009. Those who bought Bitcoin early have seen its price rise significantly, surpassing $124,000 for a brief moment in mid-2025, following a steep decline in 2023. However, the fluctuations in Bitcoin’s price — as with all forms of crypto — have also led to considerable losses.[1]

A review of Bitcoin price history shows plenty of ups and some significant downs, but despite the risks, crypto fans continue to seek it out. Like other cryptocurrencies, Bitcoin’s price is largely driven by sentiment, and those who buy in must be comfortable with the elevated risk that buying and selling crypto entails.

Key Points

•  Bitcoin’s price is a key indicator for the broader crypto market.

•  Bitcoin’s price has fluctuated significantly over time, reaching over $124,000 in mid-2025.

•  “Halving” events occur every four years cutting the number of newly minted coins rewarded to miners in half.

•  Major price surges occurred at different points in time due to factors such as halving events, public reaction to Covid-19, and institutional adoption.

•  Crashes (Crypto Winters) have also occurred as a result of inflation concerns, regulatory impacts, and events such as the failure of crypto exchange FTX.

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Bitcoin Price History Over the Years

A glance at the Bitcoin historical price chart illustrates the cryptocurrency’s steep rise since its inception. It’s equally clear that the path to Bitcoin’s current price has not always been a smooth one, and that it may continue to see fluctuations over time.

While some enjoy comparing Bitcoin’s price history to past speculative manias like Beanie Babies circa 1995 (or the infamous tulip bubble circa 1636), speculation is only one factor in any given Bitcoin price fluctuation.

Over the years, one pattern can be seen in Bitcoin’s prices. Every four years, the network undergoes a change called “the halving,” where the supply of new BTC rewarded to Bitcoin miners gets cut in half. This has happened four times so far:

•   2012: 50 BTC to 25 BTC

•   2016: 25 BTC to 12.5 BTC

•   2020: 12.5 BTC to 6.25 BTC

•   2024: 6.25 BTC to 3.125 BTC2

The next Bitcoin halving is set to occur in March or April of 2028.

In each instance, the price of BTC reached new record highs in the year or so following each halving event. This was typically followed by a Bitcoin bear market. After a period of consolidation, the price then tended to move upwards again in advance of the next halving, though there’s no guarantee that this may occur in the future.

While the price of BTC can hardly be considered predictable, it’s useful to view the chapters in the Bitcoin price history and what it may mean for potential buyers, sellers, and holders.

Bitcoin Price History by Year (2014-2025)

Year High Low
2025 $124,457.12 $74,436.68
2024 $108,268.45 $38,521.89
2023 $44,705.52 $16,521.23
2022 $48,086.84 $15,599.05
2021 $68,789.63 $28,722.76
2020 $29,244.88 $4,106.98
2019 $13,796.49 $3,391.02
2018 $17,712.40 $3,191.30
2017 $20,089.00 $755.76
2016 $979.40 $354.91
2015 $495.56 $171.51
2014 $1,007.06 $279.21

Source: Yahoo Finance, CoinDesk

Bitcoin Price 2009-2012: $0 to $13.50

Early Bitcoin price history shows relatively modest growth. As buzz around Bitcoin grew, more crypto-curious individuals began to pay attention to this seemingly novel idea and its potential as a serious vehicle for growth.

2009: $0

On October 31, 2008, the pseudonymous person or group known as Satoshi Nakamoto published the Bitcoin white paper. This paper introduced a peer-to-peer digital cash system based on a new form of distributed ledger technology called blockchain.

Then, on January 3, 2009, the Bitcoin network went live with the mining of the genesis block, which allowed the first group of transactions to begin a blockchain. This block contained a text note that read: “Chancellor on Brink of Second Bailout for Banks.” This referenced an article in The London Times about the financial crisis of 2008 – 2009, when commercial banks received trillions in bailout money from central banks and governments. This event helped mark Bitcoin’s original price at $0.

For this reason and others, many suspect that Nakamoto created Bitcoin, at least in part, in response to the way the events of those years played out.

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2010: $0.00099 to $0.30

Bitcoin’s price increased nominally for most of 2010, never surpassing the $1 mark. The first recorded price at which Bitcoin was exchanged was equivalent to roughly one-tenth of a cent, and the year closed with a price near $0.30. The first notable price jump would not be far off, however.

2011 – 2012: $1 to $13.50

Real adoption of Bitcoin began to take place about two years after it was first introduced, and a major Bitcoin price surge happened for the first time.

In 2011, the Electronic Frontier Foundation (EFF) accepted BTC for donations for a few months, but quickly backtracked due to a lack of a legal framework for virtual currencies.

In February of 2011, BTC reached $1.00 for the first time, achieving parity with the U.S. dollar. Months later, the price of BTC reached $10 and then quickly soared to $30 on the Mt. Gox exchange. Bitcoin had risen 100x from the year’s starting price of about $0.30.

By year’s end, though, the price of Bitcoin was under $5. No one can say for sure exactly why the price behaved as it did, especially back when the technology was so new. It could be that 2011 marked the launch of Litecoin, a fork of the Bitcoin blockchain — and other forms of crypto began to emerge as well — signaling greater competition.

In 2012, of course, Bitcoin saw its first halving, from a 50-coin reward for mining BTC to 25 coins. This set the stage for its precipitous growth. But the pattern of an 80% – 90% correction from record highs would continue to repeat itself going forward, even as much more Bitcoin liquidity would come into being.

Recommended: Is Crypto Mining Still Worth It in 2025?

2013 – 2016: $13 to $1,000

The period between 2013 and 2016 would mark the beginning of Bitcoin’s ascension as a cryptocurrency to be taken seriously. Pricing increased dramatically during this time, as more people began to take notice of Bitcoin’s potential.

2013: $13 to $1,193

In 2013, the EFF began accepting Bitcoin again, and this was the strongest year in Bitcoin price history in terms of percentage gains. Starting at $13 in the beginning of the year, the price of Bitcoin rose to almost $250 in April before correcting downward by over 50%. The price consolidated for about six months until another historic rally in November and December of that year, when the price hit $1,193.

This increase saw Bitcoin’s market cap exceed $1 billion for the first time ever. The world’s first Bitcoin ATM was also installed in Vancouver, allowing people to convert cash into crypto.

While the price spiked above $1,000 again briefly in January 2014, it would be nearly three years before the Bitcoin price would reach four digits again.

Amidst all this volatility was a surge in crypto interest, with Dogecoin being one of the more notable coins to emerge at that time. Though considered a meme coin, Dogecoin still exists.

2014 – 2015: $760 to $430

While the cryptoverse quietly exploded in this time period, with technological innovations that permitted a move away from proof-of-work to the less resource-intensive proof-of-stake, as well as the emergence of smart contracts, and the real foundations of decentralized finance — Bitcoin was relatively quiet.

While 2014 opened at about $760, the price overall held steady in the $200 to $500 range for much of this time, briefly dipping below $200 in January and August of 2015. Bitcoin closed out 2015 at $430, marking a period of overall price stability. The official B symbol that has come to be associated with Bitcoin was adopted in November of that year.

2016: $430 to $960

In 2016, Bitcoin halved for a second time, prompting a notable jump in prices by year’s end. January ended the month with a closing price of $368, but by December, Bitcoin’s price had almost reached $1,000. A slight dip in pricing occurred around August, but for the most part, the cryptocurrency saw a steady and consistent rise in price.

2017 – 2019: $960 to $7,200

Between 2017 and 2019, Bitcoin would dazzle crypto watchers with big price leaps, but the outlook was not entirely rosy during this period. In 2018, a major crash would deliver a blow to BTC’s price and raise questions about the stability of cryptocurrency markets as a whole.

2017: $960 to $20,000

The Bitcoin price in 2017 breached the $1,100 mark in January, a new record at the time — following the Bitcoin halving in July of 2016. By December, the price had soared to nearly $20,000. That’s a 20x rise in less than 12 months, and it was followed predictably by a decline through 2018 and 2019. Bitcoin wouldn’t see the other side of $20,000 until late 2020.

Like the 2013 price surge, the 2017 rally occurred about one year after the halving. What made this time different was that for the first time ever, the general public became more aware of cryptocurrency. Mainstream news outlets began covering stories relating to Bitcoin and other cryptocurrencies. This price rise largely reflected retail buyers entering the market for the first time.

Opinions on Bitcoin ranged from thinking it was a scam to believing it was the greatest thing ever. For the believers, this was an opportunity for many to purchase Bitcoin for the first time, but there’s little doubt that the influx of retail interest in the crypto markets contributed heavily to volatility across the board.

2018: $14,000 to $3,700

The year 2018 was an unpredictable one for Bitcoin pricing. Following a relatively strong start in January, with prices closing above $10,000, the cryptocurrency ended the year at $3,742. This period stands out as one of the most significant cryptocurrency crashes, affecting not only Bitcoin but more than 90 other digital currencies that had arisen.

Bitcoin’s decline during this period was attributed to numerous factors, including the launch of several new crypto offerings that quickly fizzled, which triggered fear in the markets.

Apart from these concerns were rumors that South Korea was contemplating banning cryptocurrency, and the hacking of Coincheck, Japan’s largest OTC cryptocurrency exchange network. Combined, these factors created a perfect storm for price drops and criticism of Bitcoin from none other than Warren Buffett, who characterized it as “rat poison squared”.

2019: $3,700 to $7,200

Bitcoin began to see some recovery in 2019, though it was initially slow going. For most of the first quarter, Bitcoin’s price hovered between $3,500 and $5,000, before a surge in June of that year that tipped its price above $13,000.

June saw the cryptocurrency’s price rise above $10,000 again, and Bitcoin held steady throughout July. By August, the tide had begun to turn, and the remainder of the year saw a gradual slide in pricing. In December 2019, Bitcoin closed at $7,193, still well above its January price point but far from the highs reached in 2017.

The next big test of Bitcoin’s strength in the crypto markets would come in 2020, with the arrival of the COVID-19 pandemic.

2020 – 2025: $7,200 to $124,000

The period from 2020 to 2025 would see Bitcoin prices reach their highest levels yet — and one of the worst crashes in the cryptocurrency’s history. Against mounting pressure, Bitcoin would continue to attract new buyers hoping to get exposure to the crypto market.

2020: $7,200 to $29,000

The crypto feeding frenzy was well underway by the end of 2019, with hundreds of new coins on the market. By January 3, 2020, Bitcoin’s price was $7,347 and rising steadily for the most part. As the halving in May of 2020 approached, Bitcoin’s price shot north of $9,100, nearly a 25% increase in just a few months.

But that was just the start of a meteoric rise — and fall — for BTC that few will forget, and a phase of Bitcoin’s story that many tie to the pandemic. With millions of people worldwide confined at home from 2020 through 2021 (in some cases longer), online speculation became a widespread phenomenon. One offshoot of that may have been the biggest Bitcoin bull market to date.

2021: $29,000 to $69,000

In August 2021, the price of Bitcoin was hovering around $46,000, and by November 2021 BTC hit its all-time best over $68,500.

Toward the end of 2021, however, the Bitcoin hash rate, a factor thought to have some correlation to the Bitcoin price, plummeted to around $47,000 — a loss of close to 30%.

The price drop occurred partly as a result of China requiring its citizens to shut down Bitcoin mining operations. The country previously housed a significant portion of the network’s mining nodes. As a result, these computers had to go offline. Many believe this reduction in mining capacity was a key factor weighing on the Bitcoin price.

In addition, politicians and regulators raised concerns about the future of crypto laws and regulations, adding to the general mood that crypto mavens refer to as FUD (fear, uncertainty, doubt) — one of many crypto slang terms now in wider use.

But as 2021 shifted into 2022, the specter of inflation — in addition to the global energy crisis and geopolitical turmoil thanks to Russia’s war on Ukraine — put a drag on the price of BTC and just about every other major crypto.

2022: $47,000 to $16,5000

From January 2022 through May, Bitcoin’s price continued to sag as the Crypto Winter officially took hold. By May, BTC dipped under $30,000 for the first time since July of 2021. June would see Bitcoin’s price move even lower, dropping to $17,708 at its lowest point that month.

What Is a Crypto Winter?

Unlike a bear market, a crypto winter doesn’t have specific parameters or criteria. But, similar to a bear market, it does mark a period of steady and sometimes precipitous losses that pervade the crypto markets as a whole.

Crypto Struggles in the Face of Crises

This downward trend proved to be the case as crypto prices overall declined through Q2 — partly affected by the collapse of stablecoins like TerraUSD and Luna. In June, Bitcoin fell below $20,000.

Crypto prices struggled through Q3 of 2022, and took another hit in November 2022, thanks to the sudden failure of crypto exchange FTX.

The exchange crashed amid a liquidity crunch and allegations of misused funds by its CEO, Sam Blankman Fried. A bailout by Binance was possible, but the deal fell through because of FTX’s troubled finances and implications of fraud.

The rapid downfall of FTX shocked the financial industry, and the crash had a massive ripple effect throughout the crypto market, affecting consumer confidence. Widespread worries about inflation, as well as steady interest rate hikes, affected broader markets. Bitcoin’s price continued to be a gauge of overall crypto health in many ways, plunging below $20,000 by the end of December, 2022.

2023: $16,500 to $44,000

January 2023 saw Bitcoin’s price increase to around $23,300, sparking hopes that the crypto winter had begun to thaw. Meanwhile, other cryptocurrencies began showing similar price patterns in Q1.

The rest of 2023 proved to be fruitful for those who were able to hold on through the crypto winter. At mid-year, Bitcoin’s price had topped $30,000 once again, and while there were some slight declines, the crypto finished the year strong. By December 2023, Bitcoin’s price notched a high of $44,705, before closing the year just above $42,000.

2024: $42,000 to $100,000+

Bitcoin would hit new benchmarks in 2024, breaking the $100,000 mark for the first time. In January of that year, the SEC would allow Bitcoin to be accessed via exchange-traded funds (ETFs), which led to the addition of several new funds to the market.

The introduction of physical Bitcoin ETFs brought major price increases, as crypto users rushed to buy shares. Bitcoin’s price surged to $63,913 in February 2024, then to $73,750 in March.

After this peak, prices would decline slightly, hovering between $65,000 and $73,000 for most of the year. In November, Bitcoin’s price brushed $100,000, before finally surging past that figure in December. That month, it reached $108,268, ending the year at $93,429.

2025: $94,000 to $124,000

Building off the momentum of 2024, Bitcoin has continued to push toward new heights for much of 2025. Despite some dips in the first quarter, the cryptocurrency reached its highest price ever in mid-August, cresting $124,457. The price fell back slightly to below $110,000 later that month.

Part of the increase can be attributed to ongoing interest in Bitcoin ETFs, which offer exposure to cryptocurrency without having to buy individual coins. Market sentiment has also moved in a more positive direction this year, thanks in part to the current administration’s stance on cryptocurrency.

In July 2025, U.S. securities regulators announced plans to modernize crypto rulemaking, which could pave the way for further innovation in the digital currency space. Dubbed “Project Crypto”, it would make a major shift in the market and potentially make the U.S. a leader in the cryptocurrency market. What that might mean for Bitcoin pricing going forward remains to be seen.

The Takeaway

Bitcoin’s historical price records are a mix of surges and setbacks, but even through crashes, it’s continued to attract interest from buyers and sellers.

As the oldest and still the largest form of crypto, BTC has gone from being worth a fraction of a penny to about $110,000 in mid-2025, which is nothing short of impressive. However, cryptocurrencies are highly volatile, and past performance doesn’t guarantee future results.

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FAQ

What was the highest price Bitcoin has ever reached?

Bitcoin reached its highest price in mid-August 2025, when it was briefly valued at $124,457. As of late August 2025, the price held above $110,000.

When was Bitcoin worth $1?

Bitcoin reached $1 in early 2011, after hovering around the $0.30 to $0.40 mark for most of 2010. In mid-2011, the price jumped to $30 before tapering off to around $2 to close out the year.

What was the original price of Bitcoin?

The first recorded price of Bitcoin was $0.00099. This price was notched in 2009, when a BitcoinTalk forum member exchanged 5050 Bitcoin with another forum member for $5.02 through PayPal.

If you bought $1,000 in Bitcoin 10 years ago, how much would it be worth today?

If you bought $1,000 in Bitcoin 10 years ago, in 2015, your Bitcoin would be worth approximately $405,000, as of August 2025. That would equate to a 40,425% rate of return on your money.

How many times has Bitcoin “crashed”?

Historically, Bitcoin has crashed nearly a dozen times, with some of the most notable crashes occurring in June 2011, April 2013, and December 2017. Bitcoin crashes occur when there are extreme price fluctuations that cause sharp declines. These fluctuations may be driven by market speculation, regulatory concerns, and macroeconomic factors, such as talk of interest rate hikes or rising inflation.

What is the significance of the Bitcoin halving?

Bitcoin halving is designed to reduce the supply of new Bitcoins entering the market. Halving occurs every four years and cuts the number of new coins created by 50%. The theory behind halving is that scarcity should lead to price appreciation if demand for Bitcoin remains high.

About the author

Brian Nibley

Brian Nibley

Brian Nibley is a freelance writer, author, and investor who has been covering the cryptocurrency space since 2017. His work has appeared in publications such as MSN Money, Blockworks, Business Insider, Cointelegraph, Finance Magnates, and Newsweek. Read full bio.

Article Sources
  1. Coindesk. Bitcoin Price (BTC).

Photo credit: iStock/simarik

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30
2025
What Is Book Value Per Share (BVPS)?

What Is Book Value Per Share (BVPS)?

By | Growing Wealth, invest, Investing | Comments Off on What Is Book Value Per Share (BVPS)?

Unlike market capitalization, which measures a company’s total equity value based on its current share price, book value per share (BVPS) is a way to calculate a company’s total assets minus liabilities, and divide that total by the number of outstanding shares to get a more accurate gauge of its share price.

Thus, BVPS can be useful when deciding whether a stock is overvalued or undervalued. For example, the book value per share of an undervalued stock would be higher than its current market price, so knowing the BVPS can help investors better assess stock prices.

Key Points

•   Book value per share (BVPS) is a financial metric that calculates a company’s total assets minus liabilities, divided by the number of outstanding shares.

•   BVPS helps investors assess whether a stock is overvalued or undervalued by comparing it to the company’s current market price.

•   A BVPS higher than the current market price can indicate that a stock is undervalued, while a declining BVPS may signal a potential stock price decrease.

•   BVPS theoretically represents what shareholders would receive if a company were liquidated after all assets were sold and liabilities paid.

•   Companies can increase their BVPS by repurchasing common stocks or by increasing assets and reducing liabilities using profits.

What Is Book Value Per Share?

Book value per share (BVPS) is the ratio of a company’s equity available to common shareholders relative to the number of outstanding company shares.

Using BVPs helps investors assess whether a stock price is undervalued or overvalued by comparing it to the firm’s market value per share (more on that below). BVPS represents what shareholders would likely receive if the firm was liquidated and its assets sold and its debts were paid.

This ratio calculates the minimum value of a company’s equity and determines a firm’s book value, or net asset value (NAV), on a per-share basis. In other words, it defines the accounting value (i.e. book value) of a share of a company’s publicly traded stock.

Book Value Per Share vs Market Value Per Share

The book value per share provides information about how the value of a company’s stock compares to the current market value per share (MVPS), or current stock price. For example, if the BVPS is greater than the MVPS, the stock market may be undervaluing a company’s stock.

The market value per share is a more complex measurement that includes metrics such as the price-to-earnings ratio. It’s forward-looking, since it’s based on what investors think a company should be worth.

Recommended: Intrinsic Value vs Market Value, Explained

What Does Book Value Per Share Tell You?

Commonly used by stock investors and analysts, the book value per share (BVPS) metric helps investors determine whether it’s undervalued compared to the stock’s current market price.

An undervalued stock will have a BVPS higher than its current stock price, which can help investors make decisions when they buy stocks online.

If the company’s BVPS increases, investors may consider the stock more valuable, and the stock’s price may increase. On the other hand, a declining book value per share could indicate that the stock’s price may decline, and some investors might consider that a signal to sell the stock.

Book value per share also theoretically reflects what shareholders would receive in a company liquidation after all its assets were sold and all of its liabilities paid.

BVPS Can Indicate a Vulnerability

If a company’s share prices dip below its BVPS, the company can potentially be vulnerable to a hostile takeover by a corporate raider who could buy the company and liquidate its assets risk-free.

Conversely, a negative book value could indicate that a company’s liabilities exceed its assets, making its financial condition “balance sheet insolvent.”

Understanding Preferred Shares

Book value per share solely includes common stockholders’ equity and does not include preferred stockholders’ equity. This is because preferred stockholders are ranked differently than common stockholders in the event the company is liquidated.

If a corporate raider intends to liquidate a company’s assets, the preferred stockholders with a higher claim on assets and earnings than common shareholders are paid first and that amount gets deducted from the final shareholders’ equity distributed among common stockholders.

Recommended: Stock Market Basics

How to Calculate Book Value Per Share

Whereas some price models and fundamental analyses are complex, calculating book value per share is fairly straightforward. At its core, it’s subtracting a company’s preferred stock from shareholder equity and dividing that sum by the average amount of outstanding shares.

Book Value Per Share = (Total Equity – Preferred Equity) / Total Shares Outstanding

Total Equity = Total equity of all shareholders.

Total Shares Outstanding = Company’s stock currently held by all shareholders.

Example of Book Value Per Share

Company X has $10 million of shareholder equity, of which $1 million are preferred stocks and an average of 3 million shares outstanding. With this information, the BVPS would be calculated as follows:

BVPS = ($10,000,000 – $1,000,000) / 3,000,000

BVPS = $9,000,000 / 3,000,000

BVPS = $3.00

How to Increase Book Value Per Share

A company can increase its book value per share in two ways.

Repurchase Common Stocks

A common way of increasing BVPS is for companies to buy back common stocks from shareholders. This reduces the stock’s outstanding shares and decreases the amount by which the total stockholders’ equity is divided.

For example, in the above example, Company X could repurchase 500,000 shares to reduce its outstanding shares from 3,000,000 to 2,500,000.

The above scenario would be revised as follows:

BVPS = ($10,000,000 – $1,000,000) / 2,500,000

BVPS = $9,000,000 / 2,000,000

BVPS = $4.50

By repurchasing 1,000,000 common shares from the company’s shareholders, the BVPS increased from $3.00 to $4.50.

Increase Assets and Reduce Liabilities

Rather than buying more of its own stock, a company can use profits to accumulate additional assets or reduce its current liabilities. For example, a company can use profits to either purchase more company assets, pay off debts, or both. These methods would increase the common equity available to shareholders, and hence, raise the BVPS.

The Takeaway

There are many methods that investors can use to evaluate the value of a company. By leveraging formulas such as a company’s book value per share, investors can assess a company’s value relative to its current market price.

While it has limitations, the BVPS can help identify companies that are undervalued (or overvalued) according to core fundamental principles, and it’s a relatively straightforward calculation that even beginner investors can use.

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FAQ

What does BVPS tell an investor?

Book value per share gives investors the company’s net value on a per share basis. It’s a way of evaluating a company’s share price before making a trade.

Is a higher BVPS better?

A higher book value per share than the market share price tells investors that the company seems to be well-funded and the stock may be a bargain (i.e., undervalued).

What is book value vs market value?

The book value is the net value of a company’s assets, as shown on its balance sheet. Book value per share, then, is the per-share price that reflects the book value. The market value is what the market is willing to pay per share, and is a more complex calculation that’s reflected by the market price.

Photo credit: iStock/Tempura

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2025
Calculating Investments Payback Period

Payback Period: Formula and Calculation Examples

By | Growing Wealth, invest, Investing, Terminology | Comments Off on Payback Period: Formula and Calculation Examples

The payback period is when an investment generates enough cashflow or value to cover its initial cost. It’s the time it takes to get to the break-even point. Knowing the payback period is something that investors, corporations, and consumers use as a way to gauge whether an investment or purchase is likely to be profitable or worthwhile.

For example, if a $1 million investment in new technology is likely to increase company revenue by $200,000 a year, the payback period for that technology is five years.

A longer payback period is associated with higher risk, and a shorter payback period is associated with lower risk and a greater potential for returns. While calculating the payback period is fairly straightforward, it doesn’t take into account a number of factors, including the time value of money.

Key Points

•   The payback period is the time it takes for an investment to generate enough cash flow or value to cover its initial cost, essentially reaching a break-even point.

•   A shorter payback period generally indicates lower risk and a greater potential for returns, while a longer period is associated with higher risk.

•   There are two primary methods for calculating the payback period: the averaging method (Initial Investment / Yearly Cash Flow) for consistent cash flows, and the subtraction method for variable cash flows.

•   Benefits of using the payback period include its simplicity, ease of calculation, and its utility in risk assessment and comparing investment options.

•   However, a key limitation of the payback period is that it does not consider earnings after the initial investment is recouped or the time value of money.

What Is the Payback Period?

The payback period is the amount of time it will take to recoup the initial cost of an investment, or to reach its break-even point.

Although investors who are thinking about buying stock in a certain company may want to consider the payback period for certain capital projects at that company (and whether those might support growth), the payback period is more commonly used for budgeting purposes by companies deciding how best to allocate resources for maximum return.

While the payback period is only an estimate, and it doesn’t factor in unforeseen or future outcomes, it’s a useful tool that can provide a baseline for assessing the relative value of one investment over another.

The Value of Time

The payback period can help investors decide between different investments that may be similar, when investing online or via a broker-dealer, as they’ll often want to choose the one that will pay back in the shortest amount of time.

The longer money remains locked up in an investment without earning a return, the more time an investor must wait until they can access that cash again, and the more risk there is of losing the initial investment capital.

Recommended: How to Calculate Expected Rate of Return

How to Calculate the Payback Period

The payback period is calculated by dividing the cost of the investment by the annual cash flow until the cumulative cash flow is positive, which is the payback year. Payback period is generally expressed in years.

Prior to calculating the payback period of a particular investment, one might consider what their maximum payback period would be in order to move forward with the investment. This will help give them some parameters to work with when making investment decisions.

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Payback Period Formula (Averaging Method)

There are two basis payback period formulas:

Payback Period = Initial Investment / Yearly Cash Flow

Using the averaging method, the initial amount of the investment is divided by annualized cash flows an investment is projected to generate. This works well if cash flows are predictable or expected to be consistent over time, but otherwise this method may not be very accurate.

Example of a Payback Period

If a company makes an investment of $1,000,000 in new equipment which is expected to generate $250,000 in revenue per year, the calculation would be:

$1,000,000 / $250,000 = 4-year payback period

If they have another option to invest $1,000,000 into equipment which they expect to generate $280,000 in revenue per year, the calculation would be:

$1,000,000 / $280,000 = 3.57-year payback period

Since the second option has a shorter payback period, this may be a more cost effective choice for the company.

Payback Formula (Subtraction Method)

Using the subtraction method, an investor can start by subtracting individual annual cash flows from the initial investment amount, and then do the division. This method is more effective if cash flows vary from year to year.

Payback Period = the last year with negative cash flow + (Amount of cash flow at the end of that year / Cash flow during the year after that year)

Example of Payback Period Using the Subtraction Method

Here’s an example of calculating the payback period using the subtraction method:

A company is considering making a $550,000 investment in new equipment. The expected cash flows are as follows:

Year 1 = $75,000
Year 2 = $140,000
Year 3 = $200,000
Year 4 = $110,000
Year 5 = $60,000

Calculation:

Year 0 : -$550,000
Year 1 : -$550,000 + $75,000 = -$475,000
Year 2 : -$475,000 + $140,000 = -$335,000
Year 3 : -$335,000 + $200,000 = -$135,000
Year 4 : -$135,000 + $110,000 = -$25,000
Year 5 : -$25,000 + $60,000 = $35,000

Year 4 is the last year with negative cash flow, so the payback period equation is:

4 + ($25,000 / $60,000) = 4.42

So, the payback period is 4.42 years.

Other factors

Investors might also choose to add depreciation and taxes into the equation, to account for any lost value of an investment over time.

Consumers may want to consider the payback period when making repairs to their home, or investing in a new amenity. For example: How long would it take to recoup the cost of installing a fuel-efficient furnace?

Benefits of Using the Payback Period

The payback period is simple to understand and calculate. It can provide individuals and companies with valuable insights into potential investments, and help them decide which option provides the best return on investment (ROI). It also helps with assessing the risk of different investments. Advantages include:

•  Easy to understand

•  Simple to calculate

•  Tool for risk assessment

•  Helps with comparing and choosing investment options

•  Provides insights for financial planning

•  Other calculations, such as net present value and internal rate of return, may not provide similar insights

•  A look at the amount of time it takes to recoup an investment

Recommended: Stock Market Basics

Downsides of Using the Payback Period

Although the payback period can be a useful calculation for individuals and companies considering and comparing investments, it has some downsides.

A Limited Time Period

The calculation only looks at the time period up until the initial investment will be recouped. It doesn’t consider the earnings the investment will bring in after that, which may either be higher or lower, and could determine whether it makes sense as a long-term investment.

If earnings will continue to increase, a longer payback period might be acceptable. If earnings might decrease after a certain number of years, the investment may not be a good idea even if it breaks even quickly. On the other hand, an investment with a short lifespan could need replacement shortly after its payback period, making it a potentially poor investment.

Other Factors May Add or Subtract Value

The payback period also doesn’t take into consideration other ways an investment might bring value, such as partnerships or brand awareness. This can result in investors overlooking the long-term benefits of the investment since they’re too focused on short-term ROI.

The payback period equation also doesn’t take into account the effects an investment might have on the rest of the company’s operations. For instance, new equipment might require a significant amount of expensive power, or might not be able to run as often as it would need to in order to reach the payback goal.

The Time Value of an Investment

Another limitation of the payback period is that it doesn’t take the time value of money (TVM) into account. The time value of money is the idea that cash will be worth more in the future than it is worth today, due to the amount of interest that it can generate.

Not only does this apply to the initial capital put into an investment, but it’s also important because as an investment generates returns, that cash can then be reinvested into something else that earns interest or income. This is another reason that a shorter payback period could be viewed as an attractive investment.

When Would an Investor Use the Payback Period?

The payback period can apply to personal investments such as solar panels or property maintenance, or investments in equipment or other assets that a company might consider acquiring.

Often an investment that requires a large amount of capital upfront generates steady or increasing returns over time, although there is also some risk that the returns won’t turn out as hoped or predicted.

How Companies Use the Payback Period

Calculating payback periods is especially important for startup companies with limited capital that want to be sure they can recoup their money without going out of business. Companies also use the payback period to select between different investment opportunities or to help them understand the risk-reward ratio of a given investment.

Knowing the payback period is helpful if there’s a risk of a project ending in the future. For example, if a company might lose a lease or a contract, the sooner they can recoup any investments they’re making into their business the less risk they have of losing that capital.

Any particular project or investment can have a short or long payback period. A short period means the investment breaks even or gets paid back in a relatively short amount of time by the cash flow generated by the investment, whereas a long period means the investment takes longer to recoup. How investors understand that period will depend on their time horizon.

Test your understanding of what you just read.

The Takeaway

Understanding the potential payback period for a given investment can help you gauge possible risks and reward for a certain asset, because it helps you to calculate when you’re likely to recoup your initial investment. You can also use the payback period when making large purchase decisions and considering their opportunity cost.

Understanding the way that companies calculate their payback period is also helpful to determine their financial viability and whether it makes sense for you to invest in them as part of your portfolio.

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FAQ

What are the two payback period formulas?

Two of the simplest and most common payback period formulas are the averaging method and the subtraction method.

What does the payback period refer to in investing?

The payback period is the estimated amount of time it will take to recoup an investment or to break even. Generally, the longer the payback period, the higher the risk of the associated investment.

What are some downsides of using the payback period?

The payback period may not consider the earnings an investment brings in following an initial investment, or other ways that an investment could generate value. It also doesn’t take into account the time value of money.

Photo credit: iStock/MicroStockHub

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Sep
26
2025
Comparing Warrants vs Options

Comparing Stock Warrants vs Options

By | Growing Wealth, invest, Investing | Comments Off on Comparing Stock Warrants vs Options

Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

Stock warrants give the holder the right to buy or sell shares of stock at a set price on or by a set date directly from the public company that issues them, whereas stock options convey the right to buy or sell shares on or before a specific date at a specific price.

The chief difference between stock warrants and stock options is that warrants are issued directly by a company that’s typically seeking to raise capital. Options are derivative contracts that investors can trade to take advantage of price fluctuations in the underlying security.

Key Points

•   Stock warrants allow investors to buy shares at a specified price on a set date, directly from the issuing company, while stock options are derivative contracts traded among investors.

•   Companies typically issue stock warrants to raise capital, whereas stock options are created and traded by investors, which may allow for more flexibility in trading.

•   Exercising a warrant results in the issuance of new shares, which can lead to dilution, while exercising options does not typically create new shares and is settled between traders.

•   Both stock warrants and options provide speculative opportunities, but differ in terms of issuance, market trading, and potential dilution effects.

•   Understanding the differences between stock warrants and options is important for investors, as each serves distinct purposes and carries unique risks and potential benefits.

What Are Stock Warrants?

A stock warrant is a contract that allows the holder the right to buy shares of stock at a future date at a predetermined price. The terms of the stock warrant typically allow the holder to purchase shares at a price that is often set above the stock’s price at the time of issue. Warrants generally have longer expiration periods than standard options, often lasting up to 10 years or more.

Companies issue stock warrants directly to investors. The companies set the terms of the warrant, including the stock’s purchase price and the final date by which the investor can exercise the warrant. Warrant holders do not have an obligation to buy the shares, but if they decide to do so they would exercise the warrants via their brokerage account.

Stock warrants are typically call warrants, which give the holder the right to purchase the shares at the predetermined price, as noted above. However, there are also put warrants, which give holders the right to sell shares at a predetermined date by the expiration date.

Public companies may issue stock warrants as a means of raising capital to fund new expansion projects. A company may also issue stock warrants to investors if it faces financial trouble and needs to raise funds to potentially avoid a bankruptcy filing.

In some cases, warrants are issued by financial institutions rather than the company itself. These are called “covered warrants” and may be cash-settled, meaning they do not result in new shares or dilution of existing shares.


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What Are Options?

An option is a contract that gives holders the right, but not the obligation, to buy (in the case of a call option or sell, in the case of a put option, an underlying security on or before a specified date at a specified price. As with stock warrants, option holders do not have to buy or sell the underlying shares, but they have the right to do so. If they do, they would exercise the options through their brokerage account.

Exercising options means you use your right to buy or sell the option’s underlying shares. If an investor chooses not to exercise the option, it expires worthless. (Note that the seller, or writer, of an options contract is obligated to fulfill the terms of the contract if it’s exercised.) Investors can trade some options on a public exchange alongside stocks and other securities.

Recommended: How to Trade Options: An In-Depth Guide

Similarities and Differences Between Warrants and Options

Warrants and options sound alike and at first glance, they seem to imply the same thing: the right to buy or sell shares of a particular stock. But there are also important differences between these two contracts that investors should be aware of.

Similarities

Warrants and options both offer investors an opportunity to benefit from movements in a stock’s price, though options can be traded without exercising while warrants typically require exercising to acquire shares.

With both warrants and options, the investor must exercise the contract to actually acquire shares. Both have specific guidelines with regard to the price at which investors can purchase (or sell, in the case of puts) their shares and the deadline for exercising them.

Warrants and options are both speculative in nature, since investors are essentially making a directional bet on which way the underlying asset’s price may move. Neither instrument provides voting rights or dividend payments prior to exercise. Investors can use different strategies when trading options or exercising warrants to potentially improve profitability while attempting to reduce losses.

Differences

Warrants and options also have important differences. While companies issue stock warrants, traders typically buy and sell options with each other directly. Warrants create new shares when exercised, which can result in dilution. Exchange-traded stock options generally do not create new shares, aside from employee stock options, which are basically a type of call option that, when exercised, can also dilute existing shares by increasing the total amount.

When investors exercise a warrant, they receive the stock directly from the company, while options are typically settled between traders.


💡 Quick Tip: Options can be a cost-efficient way to place certain trades, because you typically purchase options contracts, not the underlying security. That said, options trading can be risky, and best done by those who are not entirely new to investing.

Stock Warrants vs Options: A Summary

Here’s a closer look at options vs. warrants.

Stock Warrants

 Stock Options
Confers the right to purchase (or sell) shares of stock at a specified price on or before a specified date. Holders of the contract have the right, but not the obligation, to exercise the contract. Confers the right to buy (or sell) shares of stock at a specified price on or before a specified date. Holders of the contract have the right, but not the obligation, to exercise the contract.
Warrants create new shares, which may result in dilution. Options do not create new shares, so there’s no dilution (unless they are employee stock options).
Issued by the company directly to investors. Issued by traders or market makers who write call or put options.
Original issue warrants are not listed on exchanges, but there is a secondary market for the securities. Options can be traded on public exchanges alongside other securities.
Primarily used to raise capital for the company. Traders can buy (or write) options to try to benefit from price movements.
Warrant holders may have a decade or more in which to exercise their right to buy shares. Options tend to be shorter-term in nature, with expiration periods usually lasting anywhere from a few days up to 18 months.
Less commonly used in the U.S. Options are regularly traded on public exchanges in the U.S.

Pros and Cons of Warrants

If you’re considering warrants versus options, it’s helpful to understand the advantages and disadvantages of each.

Stock warrants can offer both advantages and disadvantages to investors. Whether or not it makes sense to include stock warrants in a portfolio can depend on your individual goals, time horizon for investing and risk tolerance. Warrants are also considered geared instruments, meaning small moves in the underlying stock can produce amplified gains or losses. This leverage may increase risk.

Stock Warrant Pros

 Stock Warrant Cons
Warrant holders have the right to purchase (or sell) shares of stock, but are not required to do so. Price volatility can diminish the value of stock warrants over time.
Stocks may be offered to investors at a premium relative to the current market price. When warrants are exercised, new shares are issued, which may result in dilution.

Pros and Cons of Options

As with stock warrants, trading options has both upsides and potential downsides. Beginning traders should have a thorough grasp of the essentials, prior to trading, to understand the complexities and risks involved. Here are some of the key points to know about trading options.

Stock Option Pros

 Stock Option Cons
Options may amplify gains compared to trading in individual shares of stock. Stock options are more sensitive to volatility which can mean higher risk for investors.
May be suited to active day traders who are hoping to capitalize on short-term price movements. Frequent options trades can mean paying more in commissions, detracting from overall returns.
Traders can use options as a hedging tool to manage risk in uncertain market environments. Time value decays the value of options over time.

The Takeaway

Understanding the difference between options and warrants matters if you’re considering either of these types of securities. While the language of stock warrants may sound similar to some of the terms used in options trading, these are in fact two different instruments.

Companies issue stock warrants primarily to raise capital, whereas traders typically buy and sell options with each other directly. Warrants create new shares of companies, while options do not typically cause any dilution.

SoFi’s options trading platform offers qualified investors the flexibility to pursue income generation, manage risk, and use advanced trading strategies. Investors may buy put and call options or sell covered calls and cash-secured puts to speculate on the price movements of stocks, all through a simple, intuitive interface.

With SoFi Invest® online options trading, there are no contract fees and no commissions. Plus, SoFi offers educational support — including in-app coaching resources, real-time pricing, and other tools to help you make informed decisions, based on your tolerance for risk.

Explore SoFi’s user-friendly options trading platform.

FAQ

Is a warrant the same thing as an option?

No. Warrants and options are not the same thing. Companies issue stock warrants to give investors the right to buy shares of stock at a specified price on a specified date. Stock warrants may allow investors to purchase shares of stock at a premium, while providing a longer window in which to decide whether to exercise the warrant.

Options are derivatives contracts that give buyers the right, but not the obligation to buy (in the case of a call) or sell (in the case of a put) an asset at a specific price within a certain period of time.

Can warrants exist in a SPAC?

Yes. A Special Purpose Acquisition Company (SPAC) is typically created for the purpose of acquiring or merging with an existing company. This type of arrangement may enable private companies to circumvent the traditional IPO process. A SPAC may use warrants to raise capital from investors. These warrants are generally good for up to five years following the completion of a merger or acquisition.

Why would you buy stock warrants?

Stock warrants may appeal to some investors seeking speculative exposure at a lower upfront cost than purchasing shares outright. Warrants offer the right, but not the obligation, to buy stock at a set price in the future, and this can be attractive if the stock’s price rises. Warrants may expire worthless if the share price does not exceed the strike price, however. They are generally considered higher-risk instruments and are not commonly used in traditional portfolios.

Can I sell my stock warrants?

Some stock warrants are transferable, and may be sold on a secondary market. This depends on the issuing company and the terms of the warrant terms. Liquidity can vary: while exchange-listed warrants may be easier to sell, others may have limited or no market activity. It’s important to check the specific warrant agreement to understand whether the security is tradable and what restrictions might apply.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/Inside Creative House

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOIN-Q325-016

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Sep
25
2025
A man in a plaid shirt and watch connects wires to a row of glowing blue computer components.

Is Crypto Mining Still Worth It in 2025?

By | Growing Wealth, Investing | Comments Off on Is Crypto Mining Still Worth It in 2025?

Crypto mining can still be profitable, but it’s potentially not as profitable for some as it was in years past. That’s true for a number of reasons. Cryptocurrencies by and large still have value, but calculating the potential for miner profitability can be a bit trickier than before, given the expense of computer hardware and software needed today, as well as the rising cost of energy it takes to keep that mining equipment running. Crypto miners must simultaneously contend with increased competition, along with potentially diminishing rewards.

That said, knowing the factors and expenses involved can help you determine if crypto mining may be a good option for you. Before deciding whether mining Bitcoin, Litecoin, Ethereum Classic, or other cryptocurrencies is worth it, it’s important to know how it works, and what the pros and cons are.

Key Points

•   High competition, higher costs, and potentially smaller rewards are some of the challenges miners face today.

•   Mining requires specialized, expensive equipment and significant energy.

•   Alternatives include joining a mining pool or cloud mining service, though it’s important to vet options for legitimacy.

•   Environmental pollution from high electricity consumption is a major concern.

•   Miners must remain aware of new regulatory changes and security risks.

🛈 While SoFi members may be able to buy, sell, and hold a selection of cryptocurrencies, such as Bitcoin, Solana, and Ethereum, other cryptocurrencies mentioned may not be offered by SoFi.

The State of Crypto Mining in 2025

Crypto mining is, as of 2025, still very much an active part of the overall crypto ecosystem. But given how popular cryptocurrency and blockchain technology has become in recent years, it’s more competitive than ever, and the rewards for mining certain cryptocurrencies have dwindled.

What Is Crypto Mining?

Crypto mining is the system used by some blockchain networks to validate and secure transactions or data, while simultaneously producing rewards and new cryptocurrencies for miners, or participants on the network. As such, it simultaneously validates the network and expands it.

Crypto mining isn’t just the creation of new cryptocurrencies, like Bitcoin (BTC), which is the first, largest, and most well-known cryptocurrency that utilizes a proof-of-work validation system. It’s also a decentralized global system by which miners validate and secure cryptocurrency transactions, and earn coins themselves. But note that there are many others, such as Litecoin, Ethereum Classic, Dogecoin, and more.

It goes back to the blockchain technology that cryptocurrencies are built on. To run these networks, miners rely on powerful computer systems, or in some cases cloud-based technology, to solve complex mathematical puzzles and validate blocks of digital transactions.

This system is known as proof-of-work (PoW). Under PoW systems, every transaction gets recorded in a transparent, immutable, public ledger known as the blockchain. The miners who solved it get rewarded with new coins being mined.

Overall, mining serves the purpose of validating a crypto network, and generating rewards for network participants, sometimes called validators or miners.

How Major Events Have Reshaped the Industry

Regulatory changes, and potential technology changes, have spurred the industry to some extent. While there are still a lot of things up in the air, legislative changes in 2025 appear to be more crypto-friendly than in previous years.

At the same time, rewards for some cryptos, particularly Bitcoin, have diminished. That’s largely due to a phenomenon introduced with Bitcoin known as the “halving,” which cuts the number of coins rewarded for mining a new block by half.

Bitcoin mining is intensely competitive, especially because the reward is halved every 210,000 blocks and now stands at 3.125 BTC, down from 6.25 BTC. At Bitcoin’s first halving event in 2012, its reward was reduced from 50 to 25 BTC. As more Bitcoins are mined and the supply of new Bitcoins drops, the amount of Bitcoins released with every new block diminishes over time. The supply will purportedly be exhausted by around 2140[1].

While Bitcoin’s halving event is likely the most significant in the crypto sector, given its relative (though volatile) value and reach, a few other cryptocurrencies use halving as well. Litecoin rewards are currently 6.25 coins per block, having last been reduced in August 2023. Litecoin gets halved every 840,000 blocks and is scheduled to produce 84 million coins, compared to Bitcoin’s 21 million.[2]

Ethereum Classic, established as the original Ethereum blockchain code following a 2016 fork that split the blockchain into Ethereum (ETH) and Ethereum Classic (ETC), uses an event called the “fifthening,” which lowers the block rewards by one-fifth, or 20%, every five million blocks.[3]

What Real Miners Are Saying

In a general sense, overall sentiment around the crypto industry is that it may still worth it to mine crypto, assuming you have the correct equipment, know what you’re getting into, and have access to relatively inexpensive electricity.

Again, it’s more competitive, and rewards are diminishing, so it’s not quite as simple, easy, or necessarily as profitable as it once was.

Crypto is
back at SoFi.

SoFi Crypto is the first and only national chartered bank where retail customers can buy, sell, and hold 25+ cryptocurrencies.

Is Crypto Mining Profitable?

As noted, crypto mining can still be profitable. But it isn’t for everyone. There are a lot of things to take into consideration.

The Unavoidable Costs

If you plan to try crypto mining on your own, here are some things to consider:

•   Equipment cost

•   Electricity cost

•   The time it will take to recoup equipment costs

•   How BTC price fluctuations (or that of other crypto) might impact profitability

•   The frequency with which you will need to buy newer, more powerful machines and sell old ones

There may be additional things to consider, too, but this is an initial list to consider.

How to Calculate Your Potential ROI

To determine your potential returns from crypto mining, you’ll need to first assess how much income you may be able to generate from mining a specific cryptocurrency.

The rewards you could potentially earn from mining different cryptocurrencies can vary dramatically. Bitcoin miners that successfully validate a new block on Bitcoin’s blockchain will earn 3.125 BTC, currently. As mentioned above, that reward will be reduced during the next halving, and be aware that it is very unlikely for an individual to mine a single Bitcoin on their own, given the vast computational power required.

Rewards for other proof-of-work cryptocurrencies may also change over time, as with Litecoin and Ethereum Classic. Similar to Bitcoin mining, altcoin miners may be most successful when working in teams or mining pools — groups that combine their computer power to mine collaboratively — though keep in mind that rewards are split up between parties.

For every PoW cryptocurrency you may be interested in mining, you’ll also need to know how much you’ll spend on mining equipment, and how much you’re paying for electricity to get a sense of a potential return on your money. That will vary depending on many factors. But with those figures in-hand, you can make an educated guess as to how much crypto rewards you could actually mine for a given cryptocurrency, and then calculate a potential return.

Best Cryptocurrencies to Mine in 2025

For those who choose to undertake the potentially costly task of mining crypto, the best cryptocurrency to mine might be the one with the lowest difficulty and highest price. But it’s critical to remember that these dynamics are in a constant state of flux, so the best cryptocurrency to mine today might not be the best one to mine tomorrow.

Mining Bitcoin: A Game for Giants

While Bitcoin mining may seem lucrative given its popularity and relative value to other cryptocurrencies, there are some caveats. For instance, to mine crypto effectively and efficiently, specialized machines built and tuned specifically to mine cryptocurrencies are often required. It also requires space, and a great deal of energy, to house and cool these powerful machines that operate around the clock.

There’s also competition to consider: The mining market is dominated by large companies who secure large warehouse facilities to house their army of mining rigs. Some of these companies might run mining pools that smaller miners can contribute to in order to get a piece of some block rewards in exchange for a small fee.

This is all to say that, today, mining Bitcoin, as an individual, is rarely profitable unless someone has access to extra low-cost electricity and affordable equipment. Industrial crypto mining exists, and it’s hard to compete with their large-scale mining operations.

Top Altcoins for GPU Mining

As noted, aside from Bitcoin, there are numerous altcoins and other cryptocurrencies that can potentially be mined. GPU mining, which stands for “graphics processing units,” involves using GPUs, rather than CPUs, to process mining calculations, and they’re generally more efficient at it.

With that in mind, there are many altcoins that users can consider mining with their GPU-equipped mining rigs:

Ethereum Classic (ETC): Unlike Ethereum, which moved to a proof-of-stake consensus mechanism, Ethereum Classic still uses proof-of-work, and may be mined using GPU or ASICs hardware.

Litecoin (LTC): Initially launched in 2011 as a decentralized global payment network and “a lite version of Bitcoin,” it was designed to be faster as well as more lightweight, but its adoption has been slower than Bitcoins’. Litecoin may be mined using high-end GPUs as well as ASICs, though working in a pool may be most viable.

Dogecoin (DOGE): While mining of the popular memecoin may be most effective using an ASICs system, it’s still possible to mine Dogecoin using a powerful GPU system.

Ravencoin (RVN): Ravencoin, a fork of the Bitcoin code used to issue and exchange tokens, is actually designed so that mining is most efficient on consumer GPU systems — and resistant to ASICs systems — thanks to an algorithm it uses called KAWPOW.

In addition to GPU options, there are also still CPU-mineable coins on the market, too, which means they can be mined using a CPU, rather than a GPU or a more advanced rig. Some coins are designed primarily for CPU mining, though these are less common. GPUs generally have more processing power than CPUs, which is why more miners may want to use GPU-equipped rigs to mine. And many cryptos can be mined with either.

Risks and Alternatives for the Crypto Miner

While there are risks associated with mining, an alternative for some people may be to join a crypto mining pool. These also have costs and risks, but may be a less-risky option for some.

As for a primer: Due to the high cost and rising difficulty of mining crypto, most miners today use something called a mining pool, as mentioned previously. Participating in mining pools is considered by many to be the only way for individual miners to make any profit today, and even then it can be difficult to recoup the costs of equipment and electricity.

Within a mining pool, individual miners pool their resources together with other miners, improving their chances of mining a block and earning the rewards. When a block gets mined, the rewards are then split up among the different miners in proportion to the amount of computing power (known as hashing power) they contributed.

Mining pool owners typically charge mining fees for maintaining and participating in the pool. There are several different pools to choose from, each with their own structure.

Further, there are also cloud mining opportunities out there, which effectively allow miners to use computing resources over the internet. Miners using this strategy are renting others’ equipment, which incurs more costs. However, it’s important to vet a cloud mining platform to ensure they’re legitimate and well-reputed, as scams in this sector are an unfortunate reality.

The Major Risks Beyond Profitability

While crypto mining can be profitable in some instances, it does have its risks and downsides. Here’s a brief rundown.

•   Environmental Risks: As mentioned, crypto mining is resource-intensive. Running mining rigs eats up a lot of electricity, which, in turn, generates environmental pollution.

•   Security Risks: Malware and other security risks exist in the mining sphere, too. For instance, it’s possible that bad actors could use techniques (like phishing) to access someone’s computer, and then load mining codes and programs onto it without them knowing. As such, the victim could be sharing their computing resources and electricity mining with a hacker without even realizing it.

•   Regulatory Risks: There are new regulations affecting the crypto space (such as the Genius Act and rules around the national Bitcoin Reserve). There are likely to be more in the future. The point is that the rules and regulations surrounding crypto are in flux, and those new rules and regulations will likely affect miners.

•   Financial Risk: Crypto mining requires upfront costs, which can be substantial. You’ll need to buy a “rig,” first and foremost, and stocking up on the necessary computer power can be expensive. As with any financial plan, there are no guarantees the money you put in will pay off. Mining may not be as profitable in the future, meaning you may not see the types of returns you were hoping for longer-term.

Is Mining a Better Option Than Buying Crypto?

Whether or not mining or buying crypto is a better financial option depends on a number of factors, such as your resources, technical skills, tolerance for risk, and timeframe.

To a large extent, it comes down to how much you plan to spend on mining equipment. And it’s important to remember that the hardware needs of crypto mining is constantly evolving as older machines become obsolete, meaning that you need more processing power over time to produce the same potential results. When this happens, miners must acquire new, more advanced hardware.

In that sense, it may make sense for those without the capital and time to devote to mining to simply buy crypto directly. Keep in mind that another alternative individuals could consider is staking vs. mining crypto in order to pursue rewards.

The Takeaway

Crypto mining is still profitable in 2025 however, it may not be as profitable as it once was, and that mining operations have become more expensive to run and maintain. That’s not to say that prospective miners won’t make a profit, but there are more things to consider than in years past.

With that in mind, mining is a complex operation that carries considerable costs and risks.

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FAQ

Can I make a profit mining with just one GPU?

Possibly, but you should take into account the fact that you may spend more on a mining rig than you could see as a result of your mining efforts.

How long would it take to mine 1 Bitcoin?

There’s no single, correct answer as to how long it takes to mine a single Bitcoin in 2025. It all depends on the amount of hashing power a miner contributes, and a bit of luck. Bitcoin’s blockchain does produce one Bitcoin around every ten minutes, but for an individual miner, there’s no telling when they could receive the reward (since not all miners are rewarded when a block is validated).

How do I find out my exact electricity cost for mining?

To figure out how much you’re spending on electricity for crypto mining, you’ll need to know how much you’re paying for electricity in your specific area, and how much electricity you’re consuming specifically for mining. From there, you can calculate your exact costs, but it could still prove to be tricky.

Is cloud mining a legitimate alternative?

Cloud mining is a viable alternative to putting your money into a crypto mining rig, but know that any potential rewards will likewise be diluted. However, cloud mining scams are not uncommon, unfortunately. It’s important to thoroughly vet any service you’re considering.

Will my mining hardware become worthless in a year?

It’s possible that your mining hardware will lose value over the course of a year, and perhaps even likely.

About the author

Brian Nibley

Brian Nibley

Brian Nibley is a freelance writer, author, and investor who has been covering the cryptocurrency space since 2017. His work has appeared in publications such as MSN Money, Blockworks, Business Insider, Cointelegraph, Finance Magnates, and Newsweek. Read full bio.

Article Sources
  1. Bitcoinblockhalf.com. Bitcoin Block Reward Halving Countdown.
  2. Litecoin. The Cryptocurrency for Payments.
  3. Ethereum Classic. Ethereum Classic Course: 8. Ethereum Classic’s Monetary Policy.

Photo credit: iStock/South_agency

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