Where is Bitcoin mining break-even point?


Bitcoin should keep the price higher than $8,600 to make the mining process profitable

How Bitcoin was invented?

Many people have wondered how Bitcoin was created. Bitcoin is not issued by the government or financial institutions, but Bitcoin is created through a process called ‘mining’.

ASIC miner (application-specific integrated circuit) or GPU graphics card are essential to solve math algorithms. After solving the algorithm, a new block will be added to the blockchain network, then the miners will receive the reward which is Bitcoins.

The Bitcoin blockchain network was set up to generate only 21 million Bitcoins with 17 million Bitcoins in circulation, leaving just over 4 million Bitcoins to exploit. For each of the 210,000 new blocks created, Bitcoin rewards are reduced by half and the difficulty of solving the algorithm also needs to be increased to ensure that the number of new blocks created each week is equal. Currently the reward for each new block added to the network is 12.5 Bitcoins.

In order to create a new block, miners must find the solution by trial and error many times. The approximate probabilidad of finding  the right number is 3,839,316,899,030 times.

The cost of mining in each country

bitcoin, bitcoin mining, miner, bitmain, switzerland, btc, asicIn the Elite Fixtures reports,the cost of electricity uses to mine a single Bitcoin in 115 countries was taken under scrutiny. The cheapest country to mine Bitcoin is Venezuela, with the cost of $531 per Bitcoin. China used to have the world’s largest mining pools thanks to  the government's electricity subsidy policy, which gives the cost of $3,172 per Bitcoin. Switzerland is also among the cheapest countries - the new paradise for crytocurrency-related startups, which is nearly twice as expensive as China ($7,494). Bitcoin mining in Vietnam is quite competitive at $4,717 per Bitcoin.

The peak of mining cost is in South Korea , it costs up to $26,170 to mine just a single Bitcoin. Even when Bitcoin hit $20,000 it couldn’t compensate for the cost of mining.

Is Bitcoin mining profitable?

According to a study conducted by Fundstrat Global Advisors, the break-even level of Bitcoin mining is 1.0x, which means the reward is equal to the total cost (at the time of research, Bitcoin price was $8,038). The miners can participate in the mining pools to exploit more efficiently, but it will mean less profit.

algorithmThe research was conducted using the capacity of AntMiner S9 or Antminer S7 miners. The price of an AntMiner S7 is $1,923; hash rate of 4,730 Gh/s, power consumption of 0.25W/Gh and it can mine 0.9153 BTC per month. The highest-capacity miner in the market is the DragonMint 16T with a capacity of 16TH/s, which costs around $2,844 including accessories.

bitcoin, bitcoin mining, miner, bitmain, switzerland, btc, asicAs shown in the worksheet above, with an average electricity cost of $0.12/kWh, the total cost solely for  electricity will be $7,992 a month. Bitcoin prices need to be higher than $8,000 in order for miner to begin to make a profit. Here we have skipped some factors such as machinery depreciation, upgrading of graphics cards, coolers and some other expenses. Since the Bitcoin blockchain network was built to increase gradually the level of difficulty after creating a new block, the more difficult the algorithms, the higher the electricity bills.

Written by nami.today