Bitcoin (BTC) is causing problems for its miners this monthas suppressed prices threaten to affect profitability.
The latest data shows both shrinking profit margins and miners waiting longer to recoup their initial investment.
The cost of production of miners faces the price of BTC
While bitcoin miners have largely refrained from selling numerous amounts of the coin as the BTC/USD pair has dropped from its all-time highs, Now the outlook looks precarious.
Calculations by the CryptoQuant on-chain analytics platform reveal that the miners’ production price – what it costs to mine a single bitcoin – could be right where the current price is.
While “gross” costs can be around $22,000 per BTC for North American miners, which houses most of the hashing power, additional costs could put the total at more than $30,000.
“We estimate the base cost for bitcoin miners in North America to be about $22,000 per bitcoin mined. This estimate includes the direct cost of mining and sales and service expenses. It does not include depreciation and amortization charges,” CryptoQuant senior analyst Julio Moreno confirmed to Cointelegraph in private comments.
“If depreciation and amortization charges are included, then the cost basis for mining bitcoin is around $30,000, basically at the same level as the current price of bitcoin.”
The fear of a “capitulation” of the miners in case the spot price deteriorates remains a topic of conversation. However, until now only May’s drop below $24,000 has prompted a noticeable reaction from the mining community.
“Our data shows an increase in bitcoin flows from miners to exchanges during March 2022 and then a sharp spike in flows during the first week of May. This is in line with reported bitcoin selling by some mining companies in the first quarter of 2022″, Moreno added.
In January, the miners’ cost of production seemed to be around $34,000according to separate data.
ROI of bitcoin miners expands in May
continuing, the Hashrate Index metric from mining firm Luxor produced more interesting data.
The index, which shows the current price in USD per terahash (TH) based on the efficiency of ASIC miners, confirms that that cost area has been declining incrementally since December 2021.
At the same time, the findings of Twitter user @XBTJames show that the time it takes for the average participant to break into profit by seeing return on investment (ROI) is expanding.
ASIC pricing, measuring in USD-per-TH, has been coming off materially since late-2021, but pricing measured in static days-to-ROI (ASIC USD price-per-TH / USD daily revenue-per-TH [aka ‘hashprice’]) tells a different story. pic.twitter.com/uFx19GRa2w
— XBT James (@XBTJames) May 27, 2022
ASIC prices, measured in USD per hour, have decreased considerably since the end of 2021, but prices measured in static days to ROI (ASIC price in USD per hour / daily revenue in USD per hour [también conocido como “precio de hash”]) tell a different story.
“The return on investment time has increased steadily since they banned the sale of ASICs in China last year. Although ASIC dollar prices have dropped, 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 pain for miners, including new market entrants and those looking to expand their hashing capabilities.
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