$30K BTC price has ‘severe impact’ on Bitcoin miner profits — analysis


Bitcoin (BTC) has been squeezing its miners this month as a drop in price threatens to affect profitability.

Latest data shows that profit margins are shrinking and miners are waiting longer to recoup their initial investment.


Miners face production costs with BTC price

Although bitcoin miners have largely held off on mass distributions as BTC/USD slides below all-time highs, the picture now appears uncertain.

Calculations from on-chain analytics platform CryptoQuant show that the output value of miners – how much it costs to mine one bitcoin – may be right where the current spot price resides.

While the “raw” cost for miners in North America, which is home to the lion’s share of hashing power, can be around $22,000 per BTC, the additional costs can total more than $30,000.

“We estimate the cost basis for bitcoin miners in North America to be approximately $22K per bitcoin mined. This estimate includes the direct cost of mining and S&A expenses. It does not include depreciation and amortization fees. ,” Cryptoquant senior analyst Julio Moreno confirmed to Cointelegraph in private comments.

“If depreciation and amortization fees are included, the cost basis for bitcoin mining is approximately $30K, basically at the same level as the current bitcoin price.”
Bitcoin miner exchange flow vs BTC/USD chart. Source: Cryptoquant

Anticipating a “capitulation” event among miners, a drop in the spot price should remain a topic of discussion. However, so far, only the May drop below $24,000 has seen a noticeable reaction from the mining community.

“Our data shows that there has been an increase in bitcoin inflows from miners to exchanges during March 2022 and then a sharp increase in inflows in the first week of May. Sales are in line,” Moreno said.

In January, the production cost to the miners was about $34,000, separate data showed.

Bitcoin Miner ROI Expands in May

Continuing, mining firm Luxor’s hashrate index metric yielded more interesting insights.

RELATED: Bitcoin miners say NY ban would be ineffective and ‘isolate’ the state

The index, which shows current prices in USD per terahash (TH) as per ASIC Miner Efficiency, confirms that there has been an increase in the cost area since December 2021.

Also, the findings by Twitter user @XBTJames suggest that seeing the return on investment (ROI) takes longer for the average participant to register a profit is increasing.

“The timing of ROI has been rising since the ‘China sanctions’ ASIC firesale last year. While the USD on ASICs has eroded in value, the selloff in BTC and the increase in difficulty severely impacted mining profitability,” the account said. explained in a series of tweets.

XBTJames said higher BTC prices will be needed to ease the pain of miners, including new market players and those looking to expand their hashing capabilities.

Bitcoin ASIC Price Index vs BTC/USD chart (screenshot). Source: hashrateindex.com

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.