Bitcoin (BTC) is squeezing the business of bitcoin miners this month, as the price of bitcoin is suppressed, potentially affecting miners' profitability.
The latest data shows that on the one hand, profit margins are constantly narrowing, and on the other hand, miners need to wait longer to pay back.
While Bitcoin miners have largely delayed major distributions as BTC/USD tumbled from all-time highs, things appear less stable now.
Data from on-chain analytics platform CryptoQuant suggests that the miner’s production price — the cost of digging a single bitcoin — may be right in line with the current spot price.
North America is the largest market for hash power. While the “raw” cost to North American miners is likely to be around $22,000 per bitcoin, additional costs could push the total to over $30,000.
"We estimate that the cost of bitcoin miners in North America is around $22,000 per bitcoin. This estimate includes the direct cost of mining and operating expenses, excluding depreciation and amortization expenses," said CryptoQuant senior analyst Julio Moreno confirmed to Cointelegraph.
"If you take depreciation and amortization into account, the cost of mining bitcoin will be around $30,000, which is basically the same as the current price of bitcoin."
Fears of a miner “capitulation” event will remain a hot topic if spot prices deteriorate. So far, though, only the May sell-off that resulted in a drop below $24,000 has evoked a noticeable reaction from the mining community.
Moreno added, “Our data shows that the flow of Bitcoin from miners to exchanges increased during March 2022, and then saw a large spike in the first week of May. This is consistent with some mining companies in 2022. Bitcoin sell-off reported in Q1 is in line.”
According to another data, in January, the production cost of miners appeared to be around $34,000.
Mining firm Luxor’s Hashrate Index has brought us some more interesting insights.
The index shows the current USD price per terahash (TH) based on ASIC miner efficiency, confirming that this cost area has been gradually decreasing since December 2021.
Meanwhile, research by Twitter user @XBTJames shows that the time it takes for the average player to enter profitability in terms of ROI is expanding.
"Time to ROI has been steadily increasing since the 'China ban' of ASICs last year. While ASIC prices in USD terms have fallen, the combination of BTC sell-off and increased mining difficulty has severely impacted mining Profitability," the account explained in a series of tweets.
XBTJames added that higher BTC prices are needed to ease the pain of miners, including new market players and companies looking to expand hash power.
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