Bitcoin (BTC) is squeezing out its miners this month as undervalued prices threaten to affect profitability.
The latest data shows that profit margins are narrowing and miners are waiting longer to recoup their initial investment.
Miner production cost collides with BTC price
While bitcoin miners have largely refrained from a major distribution as BTC/USD falls from all-time highs, the picture now looks unreliable.
Calculations by the analytics platform CryptoQuant show that the production price of miners — how much it costs to mine one bitcoin — can match the current spot price.
While the “raw” costs could be around $22,000 per BTC for miners in North America, where the lion’s share of hashing power is concentrated, the additional costs could push the total up to $30,000.
“We estimate the base cost of bitcoin miners in North America to be around $22,000 per bitcoin mined. This estimate includes direct mining costs and S&A costs. It does not include depreciation charges,” Julio Moreno, senior analyst at CryptoQuant, confirmed in private comments.
“If you include depreciation and depreciation charges, then the base cost of bitcoin mining is around $30k, basically at the same level as the current price of bitcoin.”
Concerns about miners “surrendering” in the event of a deterioration in the spot price remain a subject of discussion. However, so far only the May drop below $24,000 has been seen. noticeable reaction from the mining community.
“Our data shows an increase in bitcoin flows from miners to exchanges in March 2022, followed by a spike in flows in the first week of May. This is in line with Bitcoin sales reported by some mining companies in the first quarter of 2022,” Moreno added.
According to separate data, in January, the production cost of miners was about $34,000.
Bitcoin miner profitability increased in May
Continuing, Luxor’s Mining Company Hash Index the metric gave more interesting ideas.
Bitcoin miners say NY ban would be ineffective and ‘isolate’ the state
The index, which shows the current price in US dollars per terahash (TH) according to the efficiency of the ASIC miner, confirms that this cost area has been gradually decreasing since December 2021.
At the same time, data from Twitter user @XBTJames shows that the time it takes for the average participant to make a profit by observing the return on investment (ROI) is increasing.
ASIC prices measured in USD per TH have been declining substantially since the end of 2021, but prices are measured in static days to ROI (USD per TH ASIC price / USD per TH daily revenue). [aka ‘hashprice’]) says something else. pic.twitter.com/uFx19GRA2w
— XBT James (@XBTJames) May 27, 2022
“ROI has steadily increased since last year’s China Ban ASIC sale. While ASIC USD prices have declined, the BTC selloff and increased difficulty have combined to severely impact mining profitability,” the account explained in a series of tweets.
XBTJames added that higher BTC prices would be needed to reduce the burden on miners, including new market players and those looking to expand their hashing capabilities.
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Credit : cointelegraph.com