Return on Investment

Return on investment, commonly abbreviated as ROI, is a metric that compares a financial result with the amount of capital invested. In mining, it can be used to evaluate investments in hardware, infrastructure, or an entire mining project.

In a simple model, ROI is calculated by dividing the financial return for a defined period by the initial investment and multiplying the result by 100 percent. The exact formula depends on the selected period and definition of return.

ROI in mining

Mining investment may include ASIC miners, electrical infrastructure, cooling systems, facility construction, and other CAPEX.

The result depends on cryptocurrency price, network difficulty, electricity cost, downtime, operating expenses, and the residual value of equipment.

ROI should not be confused with payback period: ROI expresses a relative financial return, while payback period measures the time required to recover the initial investment.