Mining for Bitcoin is now a “break even” endeavor at best and unprofitable at worst, according to a new report from analytics firm Fundstrat.
Instead, it may prove more profitable to buy existing cryptocurrencies and then strategically trade their value on the various coin exchanges.
“Bitcoin currently trades essentially at the break-even cost of mining a Bitcoin, currently at $8,038 based on a mining model developed by our data science team,” said Thomas Lee, research head and managing partner at Fundstrat.
Bitcoin traded around $20,000 in December 2017, a record high for the cryptocurrency. Its value dipped under $6,000 in early 2018.
Bitcoin volatility has been considerable, plus there are the expenses involved in securing a mining rig and the cost of energy required to power such endeavors.
Where a person mines for Bitcoins is also a factor. According to one study, the average cost to mine for Bitcoins in South Korea is about $26,170
The United States is the 40th-cheapest country in the world to mine for Bitcoin. On the average, it costs about $4,758 to mine for one Bitcoin here.
Bitcoin mining involves using expensive and specialized computers to solve complex mathematical equations. Once solved, Bitcoins are awarded to the miner.
However, as each miner gets Bitcoins the mathematical equations become ever more difficult.
Such computational power generates a lot of heat which damages computers and components, necessitating the need for repairs and upgrades.
According to Fundstrat, the constant need to upgrade and replace mining rig equipment eats up half of the projected costs required to mine for Bitcoin.
Nevertheless, the Bitcoin craze gripping the world shows no imminent signs of abating. Cost-efficiency minded cryptocurrency miners are flocking to cities and countries all over the world with the most affordable energy costs.
While the incentive to mine might wane, it won’t necessarily deter true believers.
“In some cases the miners may simply turn off the machines until the price comes back a bit. It’s got to be getting to the point that some of them may be losing money,” said Shone Anstey, co-founder and president of Blockchain Intelligence Group.