Bitcoin mining data sources Hashrate Index and Luxor have reported that the cost of producing one $BTC in the United States has surged to a minimum of $17,000 for miners. This surge marks a significant rise from $5,000 to $10,000 seen just a year ago.
Increasing electricity rates in various states across the States play a role in the escalation of Bitcoin mining costs. There has been a significant surge in commercial electricity tariffs, averaging 10.71 percent per state between January 2022 and January 2023. This surge is notably higher than the average surge in Consumer Price Index, which was 6.4 percent.
The rise in operational costs and decreased returns due to Bitcoin’s poor performance in 2022 also caused active miners to experience consistent losses. This was exacerbated by a significant drop in Bitcoin’s value from around $48,000 to below $15,000.
However, the situation changed in Q1 of 2023 as the hash price of miners rose by 31 percent due to Bitcoin’s price recovery towards $30,000.
Researchers at Hashrate Index said that despite the gloomy outlook at the start of the year, the lowest day for hash price on a USD basis in Q1 was January 1, thanks to Bitcoin’s price recovering by 70 percent over the quarter.
States for Bitcoin mining, profits prediction
According to the reports, New Mexico had the lowest production cost for Bitcoin miners in Q1. This low price made it more profitable for them as they only needed $16,850 to produce one $BTC.
On the other hand, Hawaii was the most expensive state for Bitcoin mining, costing around $114,590 per $BTC. Southern and midwestern states have affordable electricity prices, making them the most appealing regions for miners.
Several states, such as Arkansas, Montana, Missouri and Mississippi, have recently implemented measures to safeguard cryptocurrency miners from overbearing regulations and taxes. However, Texas has modified its utilities and tax codes, tightening restrictions on crypto mining firms.
The researchers also predict that Bitcoin mining profitability will continue to expand due to the anticipated decline in energy prices, according to the projections of the U.S. Energy Information Administration (EIA).
Reduced operational expenses may provide a lifeline for Bitcoin mining companies struggling with finances in 2023. An instance of this is the significant rise of over 450 percent year-to-date in the stock price of Core Scientific, an already bankrupt Bitcoin mining firm. Likewise, the HI Crypto Mining Stock Index has surged over 100 percent in 2023, indicating renewed investor interest in mining stocks.
According to Hashrate Index, if the price of Bitcoin rose by 40 percent to reach $42,000 this year, most mining stocks would increase by more than 50 percent from their current level. The top four to five gainers would experience even more significant growth as they might see a rise of over 150 percent.
Regardless, mining costs are high, and many are unaware of the expenses associated with mining Bitcoin. The case of Bitdeer exemplified this. The Texas-based Bitcoin mining company had to shut down its computers to prevent a system failure and was compensated an average of $175,000 per hour to keep their computers offline.
