It now costs Bitcoin (BTC) miners at least $17,000 to produce one BTC in the US up from the $5,000-10,000 range a year ago, according to the Bitcoin mining data resource Hashrate and Luxor Index.
Bitcoin hash price has fallen 58% in one year
Unsurprisingly, rising electricity rates in US states have contributed to rising Bitcoin mining costs.
In particular, between January 2022 and January 2023, the commercial electricity rate rose to an average of 10.71% per US state, higher than the average Consumer Price Index increase of 6.4%.
along with bitcoin declining performance In 2022, which saw a peak reduction from around $48,000 to less than $15,000, it is evident that active miners generated consistent losses due to increased operating costs and lower returns.
But this changed in the first quarter of this year, as miners' hash price, or the price in USD per tera-hash per second per day (TH/s/d), increased by 31% thanks to Bitcoin price recovery toward $30,000.
โDespite how bleak the new year looked from the start, the lowest day for the USD hash price in Q1 was January 1,โ Hashrate Index researchers noted, adding:
โIt was only from there, as a 70% increase resurrected the price of Bitcoin during the quarter, and along with it, the price of hash.โ
In which state is it cheaper and more expensive to mine Bitcoin?
New Mexico emerged as the cheapest and most profitable state for Bitcoin miners in Q1 with $16,850 to mint one BTC. On the other hand, Hawaii was the most expensive at around $114,590.
Regionally, the southern and midwestern states of the US are the most attractive for miners in terms of electricity.
More recently, some US states, including arkansas, Mountain, Missouri, Mississippi and others have taken concrete steps to protect crypto miners from excessive taxes and regulations. On the other hand, Texas has modified their utilities and tax codes, tightening restrictions for crypto mining companies.
Energy deflation could boost mining profitability
Additionally, researchers anticipate Bitcoin mining margins to grow further according to the US Energy Information Association (EIA). energy price deflation expectations.
Related: Bitcoin advocates gather at the Texas State Capitol to oppose mining incentives cutting bill
For example, the agency expects electricity demand to fall 1% in the second quarter, citing additional generation from renewable sources and cheaper natural gas prices. In addition, he anticipates natural gas prices to remain below $3 in 2023 from the 2022 average of $6.45.
Bitcoin mining stocks shine
Lower operating costs could help in another way Cash-strapped Bitcoin mining companies survive in 2023. For example, the price of the shares of scientific corean already bankrupt Bitcoin mining company has jumped over 450% YTD.
Similarly, the HI Crypto Mining stock index has soared over 100% this year, showing a return of investor appetite for mining socks.
The Hashrate Index researchers noted:
"If the bitcoin price were to rise by an additional 40% to reach $42,000 this year, most mining stocks would rise by more than 50% from the current level, while the four or five biggest gainers would skyrocket by more than 150%.."
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
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