Bitcoin mining revenues are among the lowest ever
Bitcoin mining revenues are among the lowest ever
Mining

Bitcoin mining revenues are among the lowest ever

By Andrea Porcelli - 1 Dec 2022

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Data show that there are no longer any profits for Bitcoin miners, it is currently difficult to get cheap electricity to run efficient mining platforms. 

During the past few weeks, the cost of Bitcoin production has reached its all-time highs, exceeding the spot market value and putting heavy pressure on miners. 

Bitcoin mining is no longer as affordable as before

Due in part to the poor market performance and increased demand for computation, Bitcoin miners’ revenues have fallen to two-year lows. However, thanks to the continued decline in Bitcoin hashrate, the past month has given miners a chance to recoup their losses. 

Hashrate is a security metric that helps protect Bitcoin’s network from double-spending attacks. However, considering the general scheme of things, temporary measures taken by the community include buying cheaper mining hardware and moving to jurisdictions with low energy costs.

More specifically, in the numerical realm, the total revenue from Bitcoin mining (thus block rewards and transaction fees) has dropped to $11.67 million, a number last seen in November 2020, when Bitcoin hovered around $13,500, a lower price than today. Nonetheless therefore, although Bitcoin’s price is higher than in November 2020, the increased difficulty in mining and rising energy prices make the revenue significantly less. 

The mayor of New York City has spoken out at the front to counter all this energy expenditure due to mining. In fact, Eric Adams is one of the proponents of reducing the environmental costs associated with cryptocurrency mining. 

The goal of New York’s first citizen is precisely to make his city a hub for discussions and finding solutions on the issue of mining’s sustainability:  

“I will work with legislators who are in favor and those who are concerned, and I think we will come to a very good meeting point.”

Very few miners to reap profits

If miners are forced to pay electricity worth $0.12 per kilowatt-hour (kWh), there are very few mining platforms that can be called ‘profitable’. 

Data show that the cost of producing Bitcoin ($19,356 per unit) is much higher than the spot market value ($16,877 per unit). This means that Bitcoin miners must obtain the cheapest electricity they can find on planet earth and operate with the most efficient Bitcoin mining devices on the market today.

Electricity prices around the world in 2022, have skyrocketed in almost every country in the world, including those where mining is highly prevalent. The only countries with low-cost electricity rates below a US nickel per kWh include Qatar, Russia, Iran, Saudi Arabia, Venezuela, Kyrgyzstan, Cuba, Libya, Uzbekistan, and Kazakhstan. 

While cheap electricity is good for Bitcoin miners, they also need the most efficient ASIC mining units on the market; if the electricity cost is reduced to $0.07 per kWh, 16 different ASIC-compatible machines will see a profit.

Canada will not accept Bitcoin mining for a full 18 months

In fact, according to reports in several US news outlets, Canada has approved a moratorium that will last 18 months and prevent mining on its territory. All this within a seriously problematic situation for the local and public power grid, which would already be overwhelmed with debt.

Manitoba is reportedly experiencing a very worrisome and complicated phase for its power grid, and faced with a request from miners for 4.6 GW it has responded with a retort, namely by making the activity banned for the next 18 months. In reality, those in the territory will be able to continue operating, and the ban will only apply to new requests

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