A research team led by Natasha Kaneva found that the cost in power to create a unit of Bitcoin is around $4,060 globally as of Q4 2018, reports Bloomberg. The figure excludes the cost of equipment.
Bitcoin is trading at $3,405 at the time of writing.
However, miners in nations like China and Mongolia are taking advantage of cheap power and can create a unit of Bitcoin for around $2,400.
The analysts said: “The drop in Bitcoin prices from around $6,500 throughout much of October to below $4,000 now has increasingly pushed margins further and further negative for just about every region except low-cost Chinese miners.”
The team, however, admitted data about mining is incomplete.
The cost is likely to lead to miners in high-cost countries abandoning their operations. The remaining miners would then reap the benefits of a greater share of Bitcoins.
Earlier this month, a leading consultant said mining will continue to be profitable at scale.
Safety in scale?
But the “biggest drop in cryptocurrency price means for so many it is now uneconomical.”
Richards is in touch with “large-scale miners” and says it remains profitable at scale and will continue to be so going into 2019.
Richards is also in touch with “some of the largest mining pools who are seeking to double down – or to expand their operations.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.