There is a growing consensus among industry experts that only BTC miners with low electricity costs and a high sustainable energy mix will endure in an increasingly competitive landscape, such as those stated in a recent research report by JPMorgan. Electricity accounts for the majority of mining expenses, impacting the overall cost of bitcoin production. As a result, miners are seeking cheaper and more sustainable energy sources to safeguard their profitability.
Falling electricity prices have been observed, particularly in the United States, where the majority of bitcoin mining enterprises are based. Additionally, the US is the most significant contributor to bitcoin’s hashrate – the combined computational power used to mine and process transactions on a proof-of-work blockchain like Bitcoin. Lower electricity costs should help contain the rise in bitcoin production cost in the current phase of rising hashrate, said analysts led by Nikolaos Panigirtzoglou.
The cost of power has been a crucial factor in the bearish market trend over the past year as miners struggle to stay afloat. The average global price of electricity for bitcoin miners is roughly $0.05 per kilowatt-hour (kWh). However, some large mining firms have managed to pay as low as $0.03/kWh. These lower electricity costs enable prominent bitcoin miners to keep production costs minimal and maintain their profitability even in the current, highly competitive environment marked by surging hashrate levels, resulting in new record highs.
Conversely, “vulnerable” miners like Core Scientific, Argo Blockchain, and Iris Energy have found it increasingly challenging to remain operational due to a blend of declining bitcoin prices, growing debt servicing obligations, and escalating electricity costs. Miners with more expensive electricity rates have suffered losses as bitcoin prices have dropped over the past year.
JPMorgan anticipates that, over time, the bitcoin mining industry will consolidate and become more competitive as only those miners with lower production costs will survive, benefitting the entire sector in the long run. Furthermore, in an effort to be environmentally friendly, there have been continuous attempts by miners to diversify their power mix by incorporating renewable energy sources.
In conclusion, the future of the bitcoin mining industry is poised to undergo major changes, with those players who proactively adopt lower-cost electricity and more sustainable energy sources expected to thrive in the long run. This transformation will not only enhance the competitiveness within the sector but also leave a lasting positive impact on the environment.
Source: Coindesk
