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Cost to mine 1 Bitcoin reaches new high and challenges miners
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The cost to mine 1 Bitcoin has reached a new level, making it difficult for miners to be profitable. With the reduction in Bitcoin rewards after the recent halving, combined with the increase in the hash rate, mining has become an even greater challenge for companies in the sector, who were already dealing with an increasingly tight profit margin.
According to the latest report from CoinShares, the cost of mining one Bitcoin increased from $47,200 to $49,500 in the third quarter of 2024.
This amount only covers direct costs, such as energy consumption. However, the total amount can increase significantly when additional expenses are included.
“When we factor in equipment depreciation and share-based compensation, the average cost comes to $96,100 per Bitcoin,” the report notes.
Bitcoin Mining
This scenario calls into question the sustainability of many miners, especially those who depend on energy from less accessible or less efficient sources.
Electrical power continues to be one of the biggest cost factors for mining Bitcoin. Companies that use renewable energy sources achieve a competitive advantage. However, installing sustainable projects has high costs.
CoinShares estimates that a 1 MW project with containerized storage, using high-efficiency miners like the Canaan Avalon A1566, costs around $740,000. This high initial investment reduces profit margins and prolongs the return on investment, especially in a market where the price of Bitcoin can vary drastically.
Even though some mining companies are able to operate profitably, their earnings remain at low levels. The company predicts that, for the return on investment in new equipment to drop to a 27-month timeframe, Bitcoin would need to reach a value of $130,000 by 2026. Meanwhile, the cost of electricity would need to remain in the range of 4. 5 cents per kWh.
This combination of optimistic factors, however, is unlikely for many miners. This forces them to diversify their operations and seek other sources of revenue, such as artificial intelligence services.
Other factors also weigh into the cost of mining Bitcoin, including administrative expenses, tax payments, leasing costs, and employee compensation. Furthermore, mining companies that resort to debt financing face the challenge of accrued interest, which directly impacts profitability.
Cost to mine 1 Bitcoin reaches new high and challenges miners
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Cost to mine 1 Bitcoin reaches new high and challenges miners
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Cost to mine 1 Bitcoin reaches new high and challenges miners
