Bitcoin Forum

The average cost to mine Bitcoin was negative ($6,141) in the third quarter, as compared to $8,227 per Bitcoin for the same three-month period in 2022.
Earned $49.6 million in power curtailment credits during the quarter, as compared to $13.1 million in power curtailment credits earned for the same three-month period in 2022.
https://www.riotplatforms.com/riot-platforms-reports-third-quarter-2023-financial-results-current-operational-and-financial-highlights/

I'm shocked by this data. For a Russian apartment miner with an electricity price of 2 cents and a complete absence of additional expenses and taxes, the cost of bitcoin mining will be more expensive. What's the magic here?

they act as a statewide resistor for excess power on Texas power grid.

but they shut off in the summer months and get a bonus for the power company.

ie

Jan-March they burn the states extra power
April-June they burn the states excess power
July-Sept  they shut down farms to let the grid run air conditioners in peoples homes.
Oct-Dec they burn the states excess power

Note Texas is a large state with its own  power grid.

They have solar
They have windmills
They have flare gas generators

so the state has excess power 9 months a year.

and they sell it to riot

but riot gets money to turn gear off in the 3 hot months

This is an excellent practice, because in Russia they destroy electricity or reduce power at thermal power plants so that they produce less electricity.
What do you think is the price of this electricity, if the riot company has such a low cost of Bitcoin mining?

other companies also show good results in the 3rd quarter. the cost of mining coins is at least 2 times less than the market price and mining companies continue to buy new ASICs before halving.
How many bankruptcies will there be if the ETF in the US is not launched and the price of Bitcoin begins to fall?

We could ignore all the uncertainly surrounding the price movement and work with the incredible event of the halving, the halving is projected to take place around mid-April next year, probably sooner given the pace at which we are finding blocks, this means in 4.5 months rewards will be cut in half, what happens in the following weeks after the halving will be a survival of the fittest.

Post that, nobody will come out as profile or as strong, the halving will leave a huge scar on every miner including those who manage to stay, because there is just no way on earth that a 50% reward reduction would cause a 50% drop in difficulty, it never happened and it will never happen, however, what happens 4-6 months past that is going to be key, many companies and even small miners will have to reevaluate their positions, things will get ugly if the price doesn't spike to compensate the loss in the rewards.

Argo Blockchain capitalized on economic curtailment strategies at its Helios facility to accrue $4.4 million in power credits against high electricity prices, contributing to a mining margin increase to 58% in Q3 from 36% in Q2 2023.

Moreover, the company reduced the average direct cost per Bitcoin (BTC) mined by 33%, from $17,566 to $11,736. The firm also reported a reduction of 11% in recurring non-mining operating expenses and a positive Adjusted EBITDA of $3.1 million for the quarter, with a nine-month tally of $5.4 million.

https://www.financemagnates.com/cryptocurrency/argo-blockchain-q3-revenue-clouded-by-net-loss-despite-cost-cuts/

Argo Blockchain also benefits from the Texas Electric Demand and Response program.

Texas-based bitcoin mining firm Cormint reported that it mined 154 BTC in Q4, ending the year with a nameplate hashrate of 960 PH/s and 539 BTC on its balance sheet.

As a privately-owned bitcoin mining operation, Cormint joins a list of public peers in disclosing critical bitcoin mining operational statistics on a quarterly basis.

The company said in a release on Feb. 18 that it recorded a direct cost of bitcoin production of $9,463 per BTC mined in Q4, with a full-year average of $9,177 for mining a total of 510 BTC. Cormint claimed that its average power price was $28/mWh in 2023.

Factoring in other corporate overhead in addition to the direct cost of bitcoin production, Cormint reported an all-in mining cost of $19,255 per BTC for the full year of 2023.
https://theminermag.com/news/2024-02-21/cormint-bitcoin-mining-cost/

The last time I calculated the capitulating price for miners in post halving, it was at 37000$.

I am a Bitcoin mining expert and consultant and regarding my experience, the least energy price in the market is around 2.5 $cent/kwh (Which is quite rare!). so the minimum price typically starts from 3 $cent upto 4.5 $cent for industrial mining. (and 5$cent for smaller ones)... You whether need to buy in-scale capacity of electricty from power plant companies (50 MW or above) or you should be smart enough in finding intact/virgin places with cheap energy resources that are not affordable to be utilized in normal consitions!

The normal energy price for Bitcoin mining is sth in the range of 3-5 $cent....In the non-US countries, ususally the cheap source of energy is from Hydro plants...However, middle east is going to be a new player especially UAE! They can break the prices in below 3$cent

Is $37,000 the price of surrender for miners after the halving of the entire world or for an individual country? or is this the average?
I don’t know the mining conditions in many countries, but in Russia, even at a price of $30,000, miners will work with a profit after halving.

s21 about 90 kwatts a day

so
10 cents is 9.00
9 cent is 8.10
8 cents is 7.20
7 cents is $6.30
6 cents is $5.40
5 cents is $4.50
4 cents is $3.60
3 cents is $2.70
2 cents is $1.80
1 cents is $0.90

200 th x 5 cents is $10.00

right now 67k price nets 11 cents

after the ½ ing we will be near 5 or 5.5 cents

so the s21 is tight at 67k and 10 cent power after the ½ ing
as 10- 9 = 1 dollar

but if price was 44  it would earn around 6.60 a day
and you would need 6 cent power

as 6.60- 5.40 = 1.20

lastly

at 33k

it would earn 5 a day

you would need 4 cent power as
5-3.60= 1.40

I doubt the net work is all s21 say 17 watts a th

the network is likely 20-22 watts a th or even 28 watts a th.

which makes for a lot more calculations.

also people will shut down.

the question is how many 6 cent places with s19 pro at 30 watts are there? as they are dead at the ½ ing.

I’ll see what miners who have several containers of equipment write in chat. If we consider the average price of electricity, then in good places in Russia it is 3-4 cents. Miners will turn off some of the old equipment, but many have already received 21 series of ASICs and are ready for halving.

Yes, it's the price that miners will surrender. but what it means?...it means the price cannot survive long below this price level and the price will be unstable! (it doesn't mean it cannot breach that level!)

If you have access to energy prices below 2$cent/kwh then maybe you can mine profitably at 30000$!! but the average range of energy price for mining is something around
0.03-0.05 $cent/kwh...Tell me what is the industrial electricity price for energy in russia?

And also we should bear in mind there are also other factors for profitability of mining which include: the purchase price of your ASICs, the lifespan of your miners, etc

Bitcoin Miners Report (https://cryptopotato.com/bitcoin-miners-report-declines-in-production-as-profitability-slumps/) Declines in Production as Profitability Slumps

Mining Output Declines
Hut 8 was not the only major Bitcoin mining firm to report a reduction in production. Other public mining companies such as Bitfarms, Cipher, CleanSpark, Core Scientific, Riot, and Terawulf also reported production declines of between 6% and 12% in April, according to industry outlet The Miner Mag.

The halving event on April 20 reduced the block reward by half to 3.125 BTC, which also halved the mining output to around 450 BTC per day from 900.

However, the BTC fee market briefly negated the impact of the halving when Bitcoin Runes were launched, pushing up demand for block space. Nevertheless, as the latest meme asset craze loses popularity, it is expected that BTC production rates may continue to decline and miner selling may increase.


Please note that in the first month of halving, the profit of many companies fell by 6-12%.

Bitcoin halving was on April 20, and the first days of halving there was a very large commission in the blocks, so it is too early to talk about a 12% decrease in income. I would look at the May, June and July statistics for more accurate data, because many miners are still in the process of replacing equipment.

As I posted elsewhere on the board. There is equipment in locations that are under contract. Many data centers don't care if you have 10 racks that are burning all the power you are contracted for or have 10 empty racks. So long as you are at or under the allocated power of what your contract says you are paying your fixed contract rate. So even if you are mining at a loss you will keep mining since you will have less of a loss generating some coins vs no coins.

So when looking at the overall picture without taking into account things like that having people mining at a loss seems illogical, but there are reasons.

-Dave

Right now I can get some hosts for my gear.

I could do 3 s19xps
I could do 3 t21s modded to 230 volt 1 phase
I could do 2 L7 units.

About 26kwatts an hour. Small not big pay 7 cents. And a 2 year contract prepaid for six months.

If I did that all that gear would mine since I am paying for that power for at least 6 months.

It is getting expensive indeed

If you find a place with cheap electricity, then this is not the key to success in mining.Here's the story:

US Kicks Chinese Crypto Miner Off Land Near Air Force Base
Treasury says Wyoming land buy was a national security threat
MineOne Partners Ltd. planned to use land for crypto mining

The US ordered a Chinese crypto mining company to vacate and sell a property it bought near a Wyoming Air Force base that houses intercontinental ballistic missiles, calling the firm a national security threat.

MineOne Partners Ltd. and its affiliated units and companies “might take action that threatens to impair the national security” of the US, the White House said in an order. The firm must divest the real estate it bought in 2022 near the F.E. Warren Air Force Base that houses US nuclear missiles.
https://www.bloomberg.com/news/articles/2024-05-13/us-kicks-chinese-crypto-mining-firm-off-land-near-air-force-base

JPMorgan revises bitcoin (https://www.theblock.co/post/295005/jpmorgan-revises-bitcoin-production-cost-estimate-to-45000) production cost estimate to $45,000

JPMorgan has revised its central estimate of bitcoin production cost to $45,000 from the previous $42,000 projection amid a shift in bitcoin mining hashrate.

"We previously anticipated a significant drop in the hashrate post halving as unprofitable bitcoin miners exit the bitcoin network. This appears to be happening, albeit with some delay," JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report on Thursday. "The current hashrate and power consumption put our central estimate of the bitcoin production cost to around $45,000, i.e., well below current prices" of around $65,000, the analysts added.

In February, the analysts estimated the cost of producing one bitcoin to be $42,000. Consequently, they also estimated $42,000 as bitcoin's price target once the halving-induced euphoria subsides after April.

Why do they keep with this stupid assumption?
Bitcoin is not mining for coal or drilling for oil, you can't cut production, there will still be 450 Bitcoin mined every day, and you can't support the price if something is more expensive to mine, you will just have some miners quit and the ones in profit will keep on mining, mining cost will NEVER influence the price!
If such thing were true then all the community would have to do is invest just 10 billion in gear and voila, the hashrate is doubled, the cost per Bitcoin is doubled do suddenly we're at 90k per coin and we have gained 500 billion in market cap, but things don't work like this!
Price determines the hashrate, not the other way around.

If you find a way to mine bitcoin with very low cost, won't that influence the price? The total bitcoin entering the circulation will remain 450 every day, but your share increases, and that alone, can influence the price.

Let me give an example. Suppose we have 450 EH/s total hashrate. You find near zero electricity cost in Hypothetical-Islands. It only takes $10,000 to mine a bitcoin there, while it costs $50,000 the least to your competitors. Since you're with $56,000 profit for every bitcoin mined, you decide to make a big investment in infrastructure, mining at 50 EH/s. Adding this to 450, and total hashrate becomes 500 EH/s.

Your competitor might be selling it at $51,000 to make $1000 profit, but you can drop it a lot less than that, making it unprofitable to them. Then, they'll have to shut down their operations, and you can take their hashrate by expanding your operations in Hypothetical-Islands. You're practically taking a large portion of the pie, and have the flexibility to sell it for a lower price than your competitors, while expanding the hashrate.

Have I missed anything?

Instead of a guy with 30k cost mining half of them you have a guy with 20k mining half, would this make the price drop?
If it would then every new piece of gear every cheaper source of energy discovered would just take the price lower which doesn't happen.
Mining profits have dropped almost ten times since 2021, the price is the same....
https://bitinfocharts.com/comparison/bitcoin-mining_profitability.html#3y


Yup, for starters you're thinking of price manipulation but just one way around and not of the second stage.
If I would use this to bankrupt the competition, once the competition is done for, and my cost are 1/5 of the mined bitcoin I would just sell 1/5 to cover my expenses, so it would mean the price would go back up again as less coins are released, making me sell even less but at the same time making competition again possible, the wheel keeps turning. In order to drop the new contenders I would have to drop the price again, and then again...

Miners can't manipulate the market, not when BR has acquired in 4 months 600 days of block rewards, if miners had been able to Core, Argo, Compute would have not entered bankruptcy, Stronghold would not be for sale, and many many more, I think the big guys in US alone have more than 40% of the production, with their shares 1/5or 1/5 compared to 2021 they would have tried everything to manipulate the price but they simply can't, that's why we're at 5 cents per the right now, lowest ever!

The problem is that while you can manipulate daily supply you don't have a fixed demand, not like food or oil, there is no way in RL that with a 100million barrels of daily production suddenly somebody finds a locked deposit and decides to dump 1 trillions of oil (4500 coins compared to 450 daily mined) on one day or that next day everyone says no more oil and demand crashes to zero but also people take the oil back to the refineries (ETF outflows).
Unfortunately for us (miners) the daily reward is a drop in the ocean and the amount that can be held from entering is peanuts, trust me if we could have colluded to do something price would be at 300k already.

It goes both ways. Unless you really think JPMorgan doesn't know what they're talking about.

10 years ago the hashrate was a lot lower, therefore the mining cost was also lower.

Miners have to sell at a certain price to break-even. 10 years from now the mining cost will be a lot higher, I reckon.

Back in 2009 the mining cost was dirt cheap due to CPU mining, that's why you saw people selling 10k BTC for €20.

The harder it becomes to mine a single BTC, the more miners will have to charge for selling their BTC.

And vice versa, back in May 2021 we saw a huge hashrate reduction (China miner exodus) and a BTC price reduction at the same time. It's a self-regulating mechanism.

Btw, solar panels of 410W cost €79.99 currently. An array of 20 panels seems dirt cheap for a typical household.

ps: Suggesting that TSMC can ramp up their 3nm wafer production, so that the hashrate will be doubled in a short amount of time is a pipe dream.

The BTC network grows organically.

TSMC also has to produce chips for Apple, Nvidia, AMD etc. That also makes 51% harder to achieve, unless pools decide to collude and destroy their precious income.

Nuclear fusion could be the Hypothetical Island, but we won't see it before 2050.

You just managed to destroy your theory one line after  ;D
If there was a huge hashrate reduction, that means the remaining miners had more income , they were getting twice as many Bitcoins for the same consumption so why they would have to be forced to dump like previously, cutting offers to the market so, but why did the price have to go down so sharply exactly after the news while the hashrate was still intact?
The price went down because it was bad news, price dropped nearly 40% in one week, the rate dropped continuously for one and a half months afterward while ironically the price started to surge, so which one is it? Higher prices because of lower costs or lower costs and lower price or as we see now record both?  :D :D

I know the feeling, it's normal for people to try to see patterns in something, to try to establish causation and correlation but, it's simply not here in this case.


And with 8 hours of peak sun (Germany gets 5 on averge), you need 30 of them for one miner, so ~$3000, then an equivalent of at least 24kwh of battery storage (at least), and all that to make 10$ a day from a $5000 upfront machine, dirt cheap you say?

solar is cheap the panels last for 30 years inverters last for 10-15.  Just tie into the grid and they work fine for mining.

Higher hashrate = higher difficulty = higher mining cost
Lower hashrate = lower difficulty = lower mining cost

As simple as that. Do you honestly think BTC would retain its current price if everyone abandoned it? No, it would drop to 2009 prices.

Some miners sell regularly (because they have to pay their bills), while others are hodlers/speculative miners (they're even willing to mine at a loss).

It's the free market pattern in a nutshell. Nothing fancy.

€1600 for 8 kW sounds dirt cheap to me (China production surplus helps). It's not just for mining, nor did I say anything about going off-the-grid, most people don't care about BTC, but to reduce their electricity bills in general. Mining is a bonus.

I don't mind people investing in renewable energy, as long as it follows the free market principles and not some ESG centralized planning/state subsidies BS.

I'm sure the price can't affect hash rate quickly because if you want to buy a large batch of asics from a manufacturer, you will have to wait 3-6 months or more and you will need time to set up the launch of these asics. When bitcoin will already cost closer to 45 thousand and your mining calculator will show you the cost of mining at 42 thousand, then it is not profitable to start mining.

I can also show you a diagram of 2018, when the price had crashed while the hashrate was rising. It wouldn't prove that the price does not influence the hashrate, though.

I think I see. When you're done selling bitcoin at <$50,000 to kill the competition, the new buy orders will rise the price back to where it was, because you're only just a seller, once. And once the price rises, it is again profitable to mine outside the Hypothetical-Islands.

But, if you accumulate enough hashrate so that you would mine half the bitcoins everyday, wouldn't that be enough to damage the other businesses? It's difficult to think about it, because there's no good analogy in the real world. For everything in this world, if energy became cheaper, you would have increase in supply, and that is impossible to happen in this case. It's just reallocation of hashrate portions.

[/quote]

The hashrate can't react to price changes that fast, you say the price has crashed but in November it was at 6k and not counting December and January for nearly the rest of the year it was in the same 6k-8k price range, somebody who would have placed their order in May at $2.5k and got their fully functional gear 3 months later would definitely keep on mining, much like the other preorders that sometimes take even 6 months. If gear were as easy to buy as canned goods at Walmart the reactions after a price jump would be far more intense but with these delays in orders, shipping, customers, and installing you will see months of discrepancies.

Also, there is another problem, yeah price is going down, but how much does that mean in terms of earning, if you go down from 60 cents to 30 cents per th/s is not even close to the blow of getting from 10 cents/th to 5 cents. If you drop from 40 to 20, for example, there is a shitload of room for expansion, at the least profitability peak we were at 40 cents, with enough room to grow by a lot now we're almost reaching equilibrium, and whatever growth it is on borrowed money from investors by the big guys.


You will damage them by making their share of the pie smaller, so less income per $ of costs, but this will not affect the price, it will be a result of the price.


Again, basic mistake that keeps getting repeated on all these blogs!
The cost is the same, if I mine with 10cents per kWh I'm going to have the same mining cost the whole year for my s19, that's 72kwh a day, $7.2 each day, no matter what the hashrate is, it can go up or down the cost for mining is the same, it's the revenue that changes!
1 million ASICs haven't changed their mining cost just because somebody else has bought another 500k of them, it's the revenue that has slid by 1/3.

The cost of mining is not measured by the cost of electricity alone. Any miner will still have additional costs over the year, which depend on the equipment and the date of its production. The older the equipment, the more failures and additional repair and setup costs.