Bitcoin Mining Difficult and Excessive Costs
Bitcoin’s mining difficulty has been increasing sharply and of which mining has become a painful exercise for Bitcoin miners.
One of the reasons why this difficulty is rising is because Bitcoin’s value has been edging down since past November. Currently, mining of 1 unit of Bitcoin is costing more than the existing market value of Bitcoin.
According to macromicro.me data, mining a single Bitcoin costs roughly $19,356 while a Bitcoin’s market value is approximately $16,877 per coin.
There is apparently a difference of $2,479 as an excessive cost. From the business point of view, it is abundantly clear that Bitcoin mining is no longer a viable business option.
Urgent Need for Cheap Electricity
Given the circumstances, Bitcoin miners are in dire need of finding cheap electricity rates to continue their Bitcoin mining activities.
In addition, they would need to make sure that they work on top-of-the-line and highly efficient Bitcoin mining equipment.
They cannot afford to utilize old mining rigs because they consume even more electricity. More electricity would hence mean more costs.
According to the data compiled by Metrics, it suggests that per kWH electricity consumption average rate globally is roughly $0.143.
Metrics data further suggests that globally small and medium enterprises and households consumers have been paying $0.01 to 0.10 per kWH.
Countries such as Russia, Iran, Venezuela, Iran, Cuba, Qatar, Kazakhstan, Libya, Kyrgyzstan, and Uzbekistan are best known as cheap electricity countries. Their electricity consumption charges are cheaper than in the US.
Two-Fold Solution Needed
Obtaining electricity at cheaper rates is not at all the exclusive solution for Bitcoin miners instead it is a half-solution. The other half of the solution lies in mining equipment namely the ASIC mining rigs.
Statistics suggest that Bitcoin mining activity is profitable only when the electricity cost is less than $0.12 per kWH.
Currently, there are only three Bitcoin mining machines that are capable of running mining operations at $0.12 per kWH. All three machines are manufactured by one company namely ‘Bitmain’ under ‘Antminer’ models.
Bitmain Holds the Key
Bitmain’s Antminer model series, capable of earning profits for Bitcoin miners, is S19 XP Hyd., S19 XP, and S19 Pro+ Hyd.
For instance, S19 XP Hyd. comes with TH/s of 255, S19 XP boasts 140 TH/s while S19 Pro+Hyd. supplies 198 TH/s.
In these circumstances, it seems that Bitmain holds the key for Bitcoin miners in their efforts of making profits.
More profits can however be made by miners if they could find an electricity rate that is less than $0.07 per kWH.
If this happens, then Bitcoin miners have plenty of options in almost 16 machines that can guarantee profits, claims asicminervalue.com.
Positive Side
Meanwhile, it is expected that the Bitcoin mining difficulty may be reduced by at least 6.13% by 5th December.
Another estimate suggests that the reduction in difficulty could be between 6 to 10%.
The change in the difficulty level that occurred last was on 20th November 2022
Bitcoin Miners Opening Their BTC Vaults
Presently, it seems that Bitcoin mining is not a recommended business. The cost of producing a Bitcoin today is more than the spot market value of Bitcoin.
Those who are mining Bitcoins are reportedly paying excessive costs by disposing of their Bitcoins from their stashes.
The situation is currently dire for the entire crypto-mining sector and the Bitcoin miners are finding themselves facing the worst situation.
Compared to the rest of the crypto mining activities, the most expensive one is the mining of Bitcoin. If the price of Bitcoin does not rise, more Bitcoin mining centers will continue to shut down.
Over time, the mining difficulty for Bitcoin has also surged and the halving is also a major negative factor. Crypto companies have to come up with ways to increase the utility of Bitcoin and bring its price higher.