The cost of producing a single Bitcoin (BTC) has risen significantly in the United States – increasing from $5,000-10,000 to at least $17,000 within a year due to escalating electricity rates. Between January 2022 and January 2023, the average commercial electricity tariff increased by 10.71% in each US state, contributing to the mounting costs of Bitcoin mining.
In 2022, Bitcoin’s poor performance and the subsequent increase in operational expenses led to consistent losses for miners. However, Q1 of 2023 has brought some relief as miners’ hash price increased by 31%, reflecting Bitcoin’s price recovery toward $30,000.
Among US states, New Mexico emerged as the least expensive for Bitcoin mining at a rate of $16,850 per BTC. In contrast, Hawaii topped the list as the most expensive, with each Bitcoin costing miners approximately $114,590 to produce. The southern and midwestern states generally offer more affordable electricity rates for miners.
Several US states, including Arkansas, Montana, Missouri, and Mississippi, have implemented protective measures against excessive taxes and regulations for crypto miners. Meanwhile, Texas has tightened restrictions for mining companies by amending its utilities and tax codes.
With anticipated energy price deflation, researchers predict that Bitcoin mining margins will continue to grow. The US Energy Information Association (EIA) expects electricity demand to decrease by 1% in Q2, attributing this to increased generation from renewable sources and lower natural gas prices. Forecasts maintain that natural gas prices will stay below $3 in 2023, a significant decrease from 2022’s average of $6.45.
If these predictions hold, struggling Bitcoin mining companies may find reprieve in 2023 with reduced operational costs. For instance, Core Scientific, a bankrupt mining firm, has seen its stock price skyrocket by over 450% year-to-date. The HI Crypto Mining Stock Index has also seen an increase of more than 100% in 2023, indicating a renewed interest in mining stocks.
Researchers at the Hashrate Index predict that if Bitcoin’s price were to surge by an additional 40% and reach $42,000 this year, mining stocks would likely rise by over 50% from current levels. Moreover, the top four to five gainers could see increases of over 150%.
While the Bitcoin mining landscape in the US shows promising developments, it is crucial for potential investors to conduct thorough research and carefully consider the risks involved before making any investments.