During the third quarter of the year, the cost of producing 1 bitcoin went from USD 4,200 to USD 49,500.
Some companies have reduced their production costs based on energy agreements.
The cost of mining 1 bitcoin is experiencing an escalation, resulting in a challenge for the mining industry. After the halving reduced the reward for mining Bitcoin by half and the network’s hashrate began a new cycle of increase, Bitcoin miners face a drop in their income and a rise in the hash price.
According to a report from digital asset trading and investment group Coinshare, the cost of mine a bitcoin went from USD 47,200 to USD 49,500 in the third quarter of the year. “Although this only includes cash costs, if we include depreciation and stock-based compensation, this average increases to USD 96,100,” they point out.
The cost of electricity and the use of renewable energy sources continues to play a determining role in the activity of the mining companies that are part of the analysis. “Currently, a 1 MW project using containerized storage would cost approximately $0.74 million, including a low-cost, high hash rate miner like the Canaan Avalon A1566,” they explain.
A Coinshare forecast suggests that By 2026 the return on investment in mining equipment could be around 27 months, if the price of BTC reaches USD 130,000 and the cost of electricity remains at an average of 4.5 cents per kWh.
The report also points out that, due to “the nature of mining”, most companies remain unprofitable, so they have chosen to diversify their operations, issuing shares and dedicating part of their operations to artificial intelligence services.
However, they are not the only factors that a Bitcoin mining operation must deal with. Administrative expenses, one-time payments, taxes, interest on debt, leasing expenses, stock-based compensation and cash flows also determine the cost of mining Bitcoin for these companies.
In addition to these factors, the report highlights the influence of the cost of Bitcoin mining equipment in the depreciation and amortization of company finances.
Coinshare indicates that the companies in this study with the lowest production cost, from the point of view of revenue per bitcoin, and taking into account only energy costs, are Cormint (USD 16.7 thousand) and Terawulf (USD 18, 7 thousand).
In the case of Cormit, it is due to a strategy that involves greater use of liquid cooling machines and an energy acquisition and transmission strategy managed by the company itself. Which means that they do not pay external suppliers.
As for Terawulf, the lowest cost corresponds to electricity prices around USD 0.02 kWh, at a fixed rate, provided by a nuclear power plant to one of its facilities. They also have, in another of their facilities, a price of USD 0.04 kWh from a hydroelectric plant 35 miles away.
It should be noted that this is not the reality of all Bitcoin mining companies. Additionally, there are factors, such as debt acquired for infrastructure expansion and equipment acquisition, that increase the cost of mining 1 bitcoin.
As reported by CriptoNoticias, for the fourth consecutive month the profits of Bitcoin miners decreased. The constant increase in hashrate, the decrease in the reward after the halving and the price of BTC keep the industry in a state of expectation.
