Bitcoin mining is no longer worthwhile

Bitcoin mining costs $82,000 per coin; electricity hikes make it unprofitable.

: The profitability of Bitcoin mining has significantly decreased despite the current value of Bitcoin nearing its all-time high. Large mining operations report costs exceeding $82,000 per Bitcoin, while smaller miners in the U.S. and Germany face costs of $137,000 and $200,000 respectively. Rising electricity costs and reduced mining rewards due to Bitcoin halving are primary reasons for the increased expenses. This situation exacerbates the wealth gap as the majority of Bitcoin wealth remains concentrated among the top 1% of holders.

Bitcoin mining, once touted as a lucrative venture, is now facing profitability challenges despite Bitcoin's price rising close to its peak. CoinShares data reveals that the cost of mining a single Bitcoin, particularly for large-scale operations, has surged to over $82,000. This makes mining only marginally profitable, as the current Bitcoin value stands at approximately $95,000, representing a thin margin compared to previous quarters. The third quarter of 2024 saw mining costs around $56,000, indicating a 47% rise in just a few months.

The situation is even more dire for smaller mining setups. In the United States, mining costs can reach $137,000 per Bitcoin, whereas, in Germany, the expenses soar to $200,000, far exceeding Bitcoin's historic price. This means miners must absorb immediate losses with the hope that Bitcoin's value will rebound significantly in the future to recoup their investments.

Several factors contribute to these rising costs, including increased electricity prices, a trend seen not only in the U.S. due to inflation but also worldwide. The situation is exacerbated by geopolitical factors such as tariffs stemming from trade disputes and increased demand from high-consumption technologies like artificial intelligence, which further elevates electricity costs. Additionally, the Bitcoin halving event, which reduces mining rewards to curb the influx of new coins, has made mining less rewarding.

This uptick in mining costs further highlights the unequal distribution of Bitcoin wealth. The BitInfoCharts report suggests that over 90% of all Bitcoin is held by the top 1% of wallet addresses, perpetuating the concentration of wealth among a few. If Bitcoin was ever seen as a democratizing financial tool, this reality points to a widening gap between the wealthy and less affluent participants in the cryptocurrency market.

The financial strain on miners signals a broader trend of accessibility challenges within the crypto economy, wherein only those with substantial financial and technological resources can continue to profitably engage in Bitcoin mining. As traditional market dynamics reinforce such inequalities, dialogues around the viability and sustainability of mining practices in the context of economic inclusion and decentralization are increasingly critical for the cryptocurrency's future.

Gizmodo, AJ Dellinger, CoinShares

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