18 Apr 2022

Bitcoin mining profitability is under pressure

Bitcoin mining is still very profitable, but margins are under pressure from a decreasing bitcoin price and increasing hashrate
Source: Hashrate Index, CoinMetrics
Since January, the cash flow of mining one bitcoin has stayed flat, at a substantially lower level than for most of the previous year.The Antminer S19 yields $31k per BTC after electricity. The current bitcoin price is $39k, meaning that mining one bitcoin with an Antminer S19 costs $8k worth of electricity, given a power price of $0.05 per kWh.The less energy-efficient Antminer S9 requires electricity worth $26k to mine one bitcoin, giving a cash flow per BTC of $13k. Since the Antminer S9 requires more electricity than the Antminer S19, it is much cheaper.The most crucial factor impacting bitcoin mining profitability is the bitcoin price. Since the New Year, the bitcoin price has fallen from $46k, putting pressure on the margins of bitcoin miners.In addition to the bitcoin price, the total network hashrate also impacts profitability. Since New Year, the hashrate has increased by around 15%.As the total network hashrate keeps increasing, mining profitability may be under further pressure unless we see a significant increase in the bitcoin price soon. The high profitability of mining during the Autumn led to a massive buildout of mining capacity, and we might see this capacity coming online in the coming months. However, most public miners have been slower than expected in increasing their hashrate.
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