Bitcoin (BTC) may be putting its miners in a tight spot this month as pressured prices threaten to impact profitability. The latest data shows both shrinking profit margins and miners taking longer to recoup their initial investment. Here are the details…
Bitcoin vs miner production
With Bitcoin miners largely holding back on the massive distribution as BTC/USD slides down from all-time highs, the landscape is now uncertain looks. Calculations from the on-chain analytics platform CryptoQuant reveal that the miners’ production price – the cost of mining a single Bitcoin – could be where the current spot price is. For miners in North America, which is home to the lion’s share of the hash rate, “raw” costs could be around $22,000 per BTC, while additional costs could add up to over $30,000. Cryptoquant analyst Julio Moreno used the following statements:
We estimate the cost basis for Bitcoin miners in North America to be around $22,000 per BTC mined. This estimate includes the direct cost of mining and S&A expenses. It does not include depreciation and depreciation charges. If depreciation and depreciation fees are included, the cost basis for Bitcoin mining is around $30,000, basically the same as the current Bitcoin price.
Capitulation fears persist
Fears among miners regarding the disruption of the spot price of a “capitulation” event remain a talking point. But so far, only the May drop below $24,000 has seen a noticeable backlash from the mining community. CryptoQuant analyst used the following statements:
Our data shows that Bitcoin flow from miners to exchanges increased in March 2022, followed by a sharp increase in flows in the first week of May. This is in line with the Bitcoin sale reported by some mining companies in the first quarter of 2022. Separate data showed that the production cost of miners in January was about $34,000.
Bitcoin miner’s ROI expands in May
Continuing mining firm Luxor’s Hashrate Index metric has produced more interesting data. The index, which shows the current price in US dollars per terahash according to ASIC miner efficiency, confirms that this cost area has gradually decreased since December 2021. At the same time, Twitter user XBTJames’ findings show the time it takes for the average participant to take a profit, seeing their return on investment (ROI) expand.
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
Kriptokoin.com The time to return on investment has been steadily increasing since the ‘China Prohibition’ ASIC fire sale last year. As dollar pricing on ASICs plummeted, the sell-off in BTC and the increase in difficulty combined to severely impact mining profitability. XBTJames added that higher BTC prices will be needed to ease the pain of miners, including new market players and those looking to expand their hashing capabilities.
