To mine a bitcoin can be not cheap – in fact, it sometimes can be much better just to buy one. Recent research done by Elite Fixtures demonstrates that the cost of mining can go up to staggering $26 000 if you live in countries like South Korea, for example.
Experts at Fundstrat have come to the similar conclusion concerning mining:
“Bitcoin currently trades essentially at the break-even cost of mining a bitcoin”, stated the report released on Thursday.
Fundstrat’s analysis takes into account the cost of computers and the price of energy. Because of the increasing difficulty in mining calculations, constant hardware upgrades are necessary, so miners compete and buy more and more advanced gear. As mining calculations produce a lot of heat, bitcoin is not particulary environmentally-friendly.
So it all comes back to the profits. During the period of the unprecedented rise in crypto prices profitability of mining was out of the question. Starting from the last year, however, bitcoin has been mostly falling, from almost $20,000 at the end of 2017 to $8,200 at the current moment. Fundstrat estimates the break-even point for Bitcoin mining as $8,038. Even the lowering of the transaction fees down to 50 cents did little to improve the situation (in contrast with $34 transaction fees in December).
So is it the end of mining? It doesn’t seem so. Fundstrat’s analysis chooses 6 cents per hour as a global average, but there are countries where people can pay only 4 cents or even less. In the end, the profitability of mining still depends on your geographical location.