Join today and have your say! It’s FREE!
We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}

Join today with :


By providing my email, I consent to receiving investment related electronic messages from Stockhouse.
Sign in with existing account
Please Try Again
{{ error }}

Sign In With :


Password Hint : {{passwordHint}}
Forgot Password?
Please Try Again {{ error }}

Send my password

An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

As Crytpo Prices Fall, So Does the Cost of Mining It

Dave Jackson Dave Jackson, Stockhouse
0 Comments| December 5, 2018

Click to enlarge

As crypto investors know all too well by now, November was not a good month for the virtual currency space. Conversely, December has been quiet and calm in terms of volatility and price swings in the crypto market. But one positive from the downturn is that the cost of mining it is going lower.
During the last few weeks, Bitcoin (BTC) fell from US$6,300 to US$3,500, establishing a new low in more than a year. It has also led to a bigger problem in the space – miners stopped being profitable. There were even some reports of miners in China shutting down their operations entirely.
But as the price of Bitcoin falls difficulty in the network processing hash rates decreases, helping miners profitability with lower prices. It is possible to see that Bitcoin’s hash rate has been reduced by almost 50% since its all-time high registered a few months ago in August.
Before the network adjusted its difficulty, several analysts warned about the unprofitability of mining Bitcoin, something that would make mining this virtual currency more expensive than the reward provided by the network.

In a conversation with MarketWatch, Sam Doctor, the head of data science at Fundstrat Global Advisors, said that miners are still recovering from the losses in which they incurred from mining BTC.
“Our model suggests the cash cost of mining each BTC on the Antminer S9 is now US$4,500, down from US$5,300 in September. Depreciation expense has fallen to US$1,300 versus US$2,000 in September, reflecting a lower rig cost as newer devices have come to market. Fully loaded breakeven is now US$5,700, compared with a breakeven of US$7,300 in September.”
A few days ago, the second largest drop in mining difficulty on the Bitcoin network was registered. The difficulty changed -15.1%. Back in November 2011, Bitcoin’s difficulty fell by 18%.
This is one of the most interesting things about BTC. If the hash rate drops, difficulty also does, which in turn allows more miners to profit during hard times.
In the last 24 hours, Bitcoin lost 4% of its value and it has a market capitalization of $66.2 billion. Each BTC can now be purchased for US$3,843 according to Einstein Exchange.


No comments yet. Be first to comment!

Leave a Comment

You must be logged in to access this feature.


Get our FREE StockTalk Investor Guides by sector as they are released!

Stay on top of sector specific news, get industry leaders insights and our best content, delivered to your email.

You are already a member! Please enter your password to sign in.