Mining Bitcoin Is No Longer Valuable
The cryptocurrency is moving back up toward its all-time high following a decline that accompanied the stock market fall (do you recall when Bitcoin was meant to be a hedge against market volatility?). Even for some larger mining operations, it appears that mining for the cryptocurrency is no longer worthwhile. The cost of electricity and processing power required to mine Bitcoin now frequently surpasses the coin’s actual value, according to data recently released by CoinShares.
This is the breakdown of the math: A single Bitcoin, worth roughly $95,000 at the time of publication, now costs over $82,000 to mine for big mining operations. Although the margins are far thinner than they were even a quarter ago, that is still theoretically profitable. According to CoinShares, the cost of doing the computational computations required to mine for Bitcoin was approximately $56,000 in the third quarter of 2024; hence, the price has increased by roughly 47% in a short period.
Most folks aren’t industrial miners, of course. Smaller organizations are left in the dark by the equation. It is believed that the cost of mining one Bitcoin is closer to $137,000 for miners in the United States who are not working on a big scale. The math becomes more difficult if you’re mining Bitcoin in Germany: a single coin will cost roughly $200,000. Since neither price is even near to Bitcoin’s peak, you will need to suffer a loss up front and wait for the cryptocurrency to reach new heights.
There are several factors that contribute to the “why” of that abrupt pricing difference (and it’s important to note that some have claimed the mining math hasn’t been working for a while). The first is the growing cost of power, which is a problem in the US and many other countries. It is caused by inflation, Trump’s trade war, and the increased demand from high-use technologies like AI.
The price of mining equipment is also rising as a result of such levies. The fact that Bitcoin was cut in half around a year ago also helps to restrict the rate at which new coins are introduced into the market by reducing the mining reward. As a result, mining is becoming more costly and yielding a lower dividend.
When Bitcoin mining stops being profitable, most people won’t lose anything of worth. However, it might make the issue of Bitcoin’s haves and have-nots worse. The wealth has mostly accumulated at the top of a currency that is meant to be decentralized and some kind of equalizer, unlike fiat. Over 90% of all Bitcoin in circulation is held by the top 1% of wallet addresses, per BitInfoCharts. Given the expense, mining isn’t an equalizer anymore, if it ever was. The wealthy continue to get richer
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