Saturday, June 3, 2023

Inflation in mining: The cost of mining one bitcoin in the US is set to rise from US$5,000 to US$17,000 in 2023

It now costs at least $17,000 for bitcoin (BTC) miners to produce one BTC in the US.Up from $5,000-10,000 a year ago, according to bitcoin mining data resources Hashrate Index and Luxor.

Bitcoin hashprice has fallen 58% in a year

as expected, Rising electricity rates in every US state have contributed to the rising cost of bitcoin mining.,

especially, Between January 2022 and January 2023, commercial electricity rates will increase by an average of 10.71% per US state.Above average increase of 6.4% in the Consumer Price Index.

Average industrial tariff hike between January 2022 and 2023. Source: EIA/Hashrate Index/Luxor

With Bitcoin’s Downward Performance in 2022which recorded a maximum decline from around $48,000 to less than $15,000, it is clear that Active miners generate steady losses due to increased operating costs and diminishing returns,

But that changed in the first quarter of this year when miners’ hashprice, or USD per tera-hash per second per day (TH/s/d), up 31% as bitcoin price moves towards $30,000,

“Despite how hopeless the new year seemed The lowest day for Hashprice in USD in the first quarter was January 1stThe Hashrate Index researchers note that:

“From there, a 70% increase revived the bitcoin price during the quarter, and with it, hashprice.”

Inflation in mining: the cost of mining one bitcoin in the us is set to rise from us$5,000 to us$17,000 in 2023
bitcoin hashprice (in dollars). Source: HashrateIndex/Luxor

Which state is the cheapest to mine bitcoin and which is the most expensive?

New Mexico turns out to be the cheapest and in turn most profitable state for bitcoin miners in the first quarter, with $16,850 to make one BTC. On the other hand, Hawaii was the costliest at USD 114,590.

by regions, Southern and Midwestern US states most attractive to miners in terms of electricity,

Inflation in mining: the cost of mining one bitcoin in the us is set to rise from us$5,000 to us$17,000 in 2023
Cost of electricity to produce 1 BTC in various US states. Source: EIA / HashrateIndex / Luxor

Recently, some US states, such as Arkansas, Montana, Missouri, and Mississippi, among others, have taken concrete steps to protect cryptocurrency miners from excessive taxes and regulations., Besides, Texas revises its utility and tax codes, tightening restrictions For cryptocurrency mining companies.

Energy Deflation Could Increase Miners’ Profitability

On the other hand, Some researchers expect bitcoin mining margins to increase further based on expectations of energy price deflation From the United States Energy Information Association (EIA).

For example, The agency expects electricity demand to decline by 1% in the second quarterCiting additional production from renewable sources and cheaper natural gas prices. Furthermore, it expects natural gas prices to remain below $3 in 2023. instead of the 2022 average of $6.45.

Inflation in mining: the cost of mining one bitcoin in the us is set to rise from us$5,000 to us$17,000 in 2023
US Wholesale Electricity Price Forecast Source: Hashrate Index / Luxor / EIA

bitcoin mining stocks look attractive

Lower Operating Costs Could Help Cash-Strapped Bitcoin Mining Companies Survive in 2023, For example, the share price of already-bankrupt bitcoin mining company Core Scientific has jumped more than 450% YTD (year-to-date).

Similarly, the HI Crypto Mining Stock Index has skyrocketed over 100% this year, showing a Return of investors’ appetite for mining company shares,

Inflation in mining: the cost of mining one bitcoin in the us is set to rise from us$5,000 to us$17,000 in 2023
Bitcoin mining stock performance in 2023. Source: HashrateIndex/Luxor/EIA

The researchers at Hashrate Index note that:

“If bitcoin price rises an additional 40% to $42,000 this year, most mining stocks will rise more than 50% from current levels, while the four to five biggest gainers will soar more than 150%”.

the explanation: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be construed as financial advice or investment recommendation. All investments and commercial dealings involve risk and it is the responsibility of each individual to conduct appropriate research before making any investment decision.

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Investing in crypto assets is not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed at or accessible to investors in Spain.

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