Bitcoin Mining Cost At $86,700: Price To Surpass This Soon?
17 Juni 2024 - 6:30PM
NEWSBTC
Data suggests the average cost of mining Bitcoin is standing around
$86,700 right now. Here’s what history suggests could happen next
for BTC. Bitcoin Average Mining Cost Is Currently Notably Higher
Than The Price In a new post on X, analyst Ali Martinez has talked
about how the average mining cost of BTC is looking like right now.
The Bitcoin network runs on a consensus mechanism based on the
“proof-of-work” in which validators called the miners compete
against each other using computing power to get to hash the next
block on the chain. This computing power naturally has its running
cost, with electricity being the most notable expense that the
miners have to pay, given that it’s a perpetual cost. The incentive
for spending capital on mining operations lies in the block rewards
that these validators receive upon successfully adding the next
block. Obviously, mining expenses are different depending on
location, as electricity prices aren’t the same everywhere. As
such, the chart that Ali has cited from MacroMicro uses data
provided by the Cambridge University on BTC electricity consumption
to find out an average value. Related Reading: Bitcoin FOMO: Social
Media Users Calling To Buy Sub-$66,000 Dip Below is the chart in
question, which shows how the average mining cost on the Bitcoin
network has changed over the past few years. As is visible in the
above graph, the Bitcoin average mining cost (colored in blue) had
been below the price of the cryptocurrency earlier in the year, but
recently, the former’s value has spiked and has surpassed the
latter’s. The reason behind this sudden increase is that there is
another variable at play when calculating the average cost of
mining Bitcoin: the Issuance, or the number of tokens that the
miners are minting daily. In general, the block rewards stay fixed
both in value and frequency, so the Issuance of the network, which
is nothing else than the sum of the block rewards mined in a day,
more or less remains fixed as well. Specific events, however, don’t
abide by this. They are the Halvings. These periodic events that
take place approximately every four years permanently slash the
block rewards in half. The latest such event, the fourth ever in
the cryptocurrency’s history, occurred back in April. Naturally,
the Halvings mean that the cost of mining 1 BTC drastically goes
up, as miners only get half as many rewards as before after doing
the same amount of work. Thus, it’s not surprising that the cost of
production for the coin observed a sharp increase coinciding with
the latest Halving. At present, this metric stands at $86,700,
meaning that according to MacroMicro’s model, the average miner
would be underwater. Related Reading: Dogecoin Plunges 11%, But
This On-Chain Cushion Could End Decline Based on the past trend of
the indicator, Ali has identified a pattern that Bitcoin has always
followed. “Historically, BTC always surges above its average mining
cost!” notes the analyst. As such, if this pattern continues to
hold for the current cycle as well, then it may only be a matter of
time before Bitcoin surges past the $86,700 mark. BTC Price Bitcoin
has gone through a drawdown of more than 5% recently, which has
brought its price under the $66,000 level. Featured image from
Dall-E, MacroMicro.me, chart from TradingView.com
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