The cost of mining is considered one of the key support levels for Bitcoin, since the price rarely stays below this indicator. However, mining costs are not a constant, and now the cost has dropped to a 10-month low and is 13 thousand for mining one coin.
The main values affecting the cost of Bitcoin mining are: equipment costs, electricity costs and calculation complexity. The cost of electricity does not change so quickly, and large mining companies are trying to use renewable energy sources. For simplicity of calculations, it can be taken as a constant.
The price of equipment has dropped significantly this year, as miners refuse to pre-order.
Moreover, a number of companies bought ASICs on credit against their own collateral in the bank, and now they are forced to sell equipment to cover expenses. Thus, according to Luxor estimates, the volume of problem loans with equipment collateral is $4 billion. In the secondary market, ASICs have already halved in price since the beginning of the year, and equipment suppliers offer significant discounts on wholesale purchases (the final price is not disclosed).
But with complexity, everything is a little different. In the Bitcoin network, the complexity is regulated by the network once every two weeks so that the mining speed remains unchanged – one block in 10 minutes. The price drop by 70% from the maximum forced miners to turn off low-efficiency installations, but top-end ASICs continue to generate income. This led to the replacement of some players by others, and the difficulty and hashrate from their records decreased by only 7% each.
A paradoxical situation has arisen: some companies sell Bitcoin reserves at current prices so that they are not auctioned off (for example, BITF sold half of the reserve in the amount of 3 thousand BTC in June), while others take advantage of the moment and buy equipment at bargain prices.
Thus, CleanSpark (NASDAQ:CLSK) called the current conditions “unprecedented opportunities” and bought 1800 installations of S19 XP from Bitmain and 1061 asic M30S from Whatsminer at “exceptionally low prices” over the past 30 days. As a result of the acquisitions, the capacity and production volume increased by 50% from the beginning of the year.
Do mining and miners have an impact on the price of Bitcoin? In fact, no. Miners generate a small amount of supply, and when the price drops, many of them try to hold coins in the hope of future growth. The current reserve of miners is estimated by the agency Glassnode at 70 thousand. BTC or $1.4 billion (0.4% of the total capitalization).
Despite a significant drop in price, the hashrate of the network remains at high levels, as the efficiency of equipment increases, and some players replace others. The situation can be changed by a short-term and strong drop in price to the current cost level, but later the network will adjust the complexity of calculations, and everything will return to normal.