- May 3, 2023
- Posted by: [email protected]
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The cost of mining one bitcoin in the United States has risen to at least $17,000 compared to the range of $5,000 to $10,000 just a year ago. This increase is due to the rising electricity rates in the country, with commercial electricity tariffs surging at an average of 10.71% per state between January 2022 and January 2023. This surge is higher than the average consumer price index increase of 6.4%, which has contributed to the increase in bitcoin mining costs. Additionally, the decrease in bitcoin’s performance in 2022 resulted in active miners generating consistent losses due to increased operational costs and lower returns.
However, things changed in Q1 of 2023, as the miners’ hashrate rose by 31% due to the recovery of Bitcoin’s price towards $30,000. The researchers at Hashrate Index noted that the lowest day for hashprice on a USD basis in Q1 was January 1. They found that New Mexico emerged as the cheapest state for Bitcoin miners in Q1, while Hawaii was the most expensive.
The southern and midwestern U.S states are the most attractive regions for miners in terms of electricity. Some U.S states, including Arkansas, Montana, Missouri, Mississippi, and others, have taken concrete steps to protect crypto miners from excessive taxes and regulations. However, Texas has amended its utilities and tax codes, bolstering restrictions for crypto mining companies.
The researchers anticipate that the Bitcoin mining margins will grow further based on the U.S Energy Information Association’s (EIA) expectations of energy price deflation. For example, the agency expects the demand for electricity to drop by 1% in Q2, citing additional generation from renewable sources and cheaper natural gas prices. It further anticipates that natural gas prices will remain below $3 in 2023, down from 2022’s $6.45 average. Lower operational costs could help otherwise cash-strapped Bitcoin mining companies survive in 2023.
The stock price of Core Scientific, an already bankrupt Bitcoin mining firm, has jumped over 450% year-to-date, showing investor appetite for mining stocks. Similarly, the HI Crypto Mining Stock Index has soared by more than 100% this year.
