Bitcoin mining has become one of the most popular sources of income amid the global pandemic. Many found mining cryptocurrencies as their secondary source of income. Although BTC mining operations got some criticism because of high electricity consumption, many still planning to step in the scenario. Following such a scenario, JPMorgan, an investment bank, has estimated the production cost to mine one flagship crypto coin. According to the bank, it is noted that recently, the expenses have reduced by more than $11,000. Indeed, currently, mining 1 BTC requires approximately $13,000, whereas the price of 1 BTC is $20,972 at press time.
Bitcoin mining production cost
The production cost of mining the most prominent crypto coin is an estimate of the average cost for mining one coin every day. According to the BTC white paper, it is observed that the cost primarily depends on the power usage costs that are incurred by miners for running their machines. However, it also consists of other variables.
It is quite considerable that until the price of BTC is more than the production cost, the operations are profitable. On the other hand, many also suggest that the expenses can serve as the lower bound of BTC price range, when the trends are bearish.
According to JPMorgan, BTC’s bottom could be very well be a lowly $13k, marking a 45% drop on Sunday. Nikolaos Panigirtzoglou, a JPMorgan strategists, it is noted that while aiding the Bitcoin miners’ profitability and potentiality reducing pressures on miners to sell Bitcoin holdings to raise liquidity or for deleveraging, the plunge in the expenses of mining seems perceiving a negative trend for the actual coin. Hence, the estimations are based primarily on the decrease in carbon-footprint with more efficient solutions.
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MacroMicro provides a different study
MacroMicro, another data provider platform, the Bitcoin mining production cost is still dangling near $17,700.
Both the platforms calculated the mining expenses using the Cambridge Bitcoin Electricity Consumption Index (CBECI). However, the data provided by the tool depends on the average power usage and can deviate widely and affect calculations. Furthermore, other things also include like the infrastructure expense, employees maintenance, and mining farms.
However, although there is a difference in the cost of mining Bitcoin, all farms have come under pressure of following the coin’s catastrophic decline since November. Notably, public mining firms have also been brutally affected following such sentiments.