Some estimates show that Bitcoin mining may no longer be profitable to miners.
Thomas Lee from Fundstrat said the following in a report:
“The current cost of mining Bitcoin is no longer profitable to miners.”
“Normally, when the price for selling Bitcoin drops too low, the miners stop mining for a while.” Said the co-founder of Blockchain Intelligence Group, Shone Anstey.
The price for Bitcoin has dropped to the extent that it is no longer profitable to mine. The price of Bitcoin no longer covers for the cost of mining efficiently.
The Cost Of Mining Bitcoin
Mining Bitcoin isn’t cheap. It is created through an intense energy consuming process that requires solving complex mathematical equations with high computing power. The Bitcoin is the reward miners get for completing the equations.
Just like with every other business, the goal of mining Bitcoin is to make a profit. If the money it takes to create it becomes more than the reward, the miners will lose money. The hardware required to mine Bitcoin run from several hundreds of dollars to a few thousand. And as time passes, more efficient, and expensive equipment is being developed.
Miners need to replace their equipment from time to time to keep up with the technological trend. Statistics show that replacement accounts for half of what it costs to mine.
Fundstrat created a model for calculating the cost of mining Bitcoin and concluded that the break-even estimate isn’t encouraging to miners.
Miners also generate income from Bitcoin transaction fees. However, this has fallen lower than 50 cents from $34 between December and March.
The cost of mining Bitcoin is relative from one place to another since the cost of electricity and machinery differs from country to country. Miners who still have access to cheap electricity will make more profit than those who don’t.
