- Current cost of mining on bitcoin has risen to $7,300 and will further increase to $15,100 after the halving
Over the past few weeks, we saw the Bitcoin price tanking to $3,850 from February high above $10,500. After jumping above $6,000, the price of bitcoin is yet again hovering around this level.
This drop in BTC price turned miners’ profitability margin into the negative because while the price is around $6k, the cost of mining one bitcoin rose to $7,300, due to increasing hash rate, up from a month back’s $6,851 when Bitcoin was trading around $10,000.
As per cryptanalysis company, TradeBlock’s latest report, this cost of mining bitcoin would further increase to between $12,000-$15,000 after the halving.
6% profit margin after halving in 2012
Every four years or 210,000 blocks, the bitcoin network undergoes a reduction in new supply. In November 2012, we had our first such halving.
Leading up to the event in 2012, the hash rate of the network climbed to a high of 27 Th/s. An increase in hash rate means the resources committed to secure the network has also increased. As the resources dedicated to mining rises, so does the efficiency gains and/or mining costs.
Increasing hash rate needs to correspond with rising BTC price in order to maintain healthy profit margins for miners.
Three months before the halving in 2012, the breakeven cost to mine one bitcoin was $4.45 while the exchange price of Bitcoin was about $9.50. The network hash rate reached a near term peak following the halving which puts the gross cost to mine bitcoin after the halving at $12.68 while the Bitcoin price jumped to $13.50 that had miners operating in profit.
After the halving, the network hash rate declined but it was a modest dip and it didn’t sustain.
33% profit margin after halving in 2016
In 2016, three months before the halving, the hash rate reached a new high of 1,250,000 Th/s yet again. The estimated cost to mine one bitcoin at that time was $217 while the bitcoin…