In times when the crypto community is preoccupied with the increasing ubiquity of Bitcoin, an intriguing report related to mining has emerged. The disparities in the cost of Bitcoin production across the globe are stark, thanks to the varying costs of electricity in different nations.
A recent report published by CoinGecko, reveals some astonishing details about household electricity expenses for Bitcoin miners in various countries. For instance, while mining a single Bitcoin in Italy might cost an exorbitant amount of $208,500, the same would be roughly 783 times cheaper in Lebanon.
Though Bitcoin bulls might argue, quite reasonably, that the location-specific cost differential offers an edge, the report points out that merely 65 countries are profitable for solo Bitcoin miners, considering only domestic electricity rates. Harping on the importance of electricity, a key input in Bitcoin mining, one might reel under the worldwide average cost of household electricity. The average cost to mine one Bitcoin is alarmingly high at $46,291.24, surprisingly 35% more than the average daily price of Bitcoin in July 2023 at $30,090.08, as per the report.
However, there is no denying that mining Bitcoin is significantly harder in countries with high electricity costs. Nations such as Italy, Austria and Belgium top the charts with the most expensive Bitcoin production rates. On the other hand, Lebanon, with its reasonable household electricity rates, allows individual miners to produce one Bitcoin for as low as $266.02, almost 783 times cheaper than Italy’s rate.
The CEO of Binance, Changpeng “CZ” Zhao, raised skepticism towards the report, brushing it off as overlooking feasibility and other logistics, in a post on X (formerly Twitter). He voiced doubt about these countries, with low electricity prices, taking advantage and mining Bitcoin. He might be right in pointing out the curious absence of Iran on the list, despite legalizing Bitcoin mining in 2019, owing to the stress on energy grids during winter.
On the other hand, an argument can also be made that despite the higher costs in countries like Italy, the legacy infrastructure, availability of resources, and safety might outweigh the cheaper costs in lesser developed regions.
The significant worldwide contrast in household electricity expenses for Bitcoin miners brings forth the reality of mining operations around the globe. However, is it the only determinant for setting up mining farms? Perhaps, it’s fair to surmise that while mining expenses are crucial, they are far from being the only determinant. Exciting as it may sound that mining is cheaper in some parts of the world, it is essential to remember the concept of “total cost,” inclusive not just of operational costs but also factors such as safety, stability, and accessibility.
CZ’s skepticism may pivot on a valid point, that there might be more to crypto mining than mere profit and loss statements. While the data points towards potential opportunities, the current context seems to suggest otherwise. The report, and the questions it raises, surely adds to the excitement in the crypto world. It indeed feels like we are riding the wave of a Bitcoin revolution!