BTC: A fundamental perspective of mining
Updated
The chart shows the marginal costs of BTC mining (~ electricity expenses per BTC) at 0.05 USD/kWh with different mining hardware.
There is strong evidence that the Antminer S9 has been the dominating mining device in 2017/2018. The bottom of BTC (Dec. 2018 to March 2019) was close to the marginal cost of mining with an Antminer S9 at 5ct/kWh. New miners were launched in 2019. So we may expect a mix of miners’ marginal costs as new “fundamental” bottom.
I am not a crypto of BTC trader, but rather an energy economist. Electricity prices of 3-5 ct/kWh are reasonable assumptions for heavy industry tariffs in China. Nameplate efficiencies of miners are likely overestimating the overall efficiency, as cooling and other loses have to be taken into account.
In summary, 5 ct/kWh is my best guesstimate from an energy economic perspective.
Of course, there is the possibility that prices fall below these fundamentals. A scenario would be that dominant miners operate at losses to “ruin” competitors. However, this strategy needs a solid capital base.
There is strong evidence that the Antminer S9 has been the dominating mining device in 2017/2018. The bottom of BTC (Dec. 2018 to March 2019) was close to the marginal cost of mining with an Antminer S9 at 5ct/kWh. New miners were launched in 2019. So we may expect a mix of miners’ marginal costs as new “fundamental” bottom.
I am not a crypto of BTC trader, but rather an energy economist. Electricity prices of 3-5 ct/kWh are reasonable assumptions for heavy industry tariffs in China. Nameplate efficiencies of miners are likely overestimating the overall efficiency, as cooling and other loses have to be taken into account.
In summary, 5 ct/kWh is my best guesstimate from an energy economic perspective.
Of course, there is the possibility that prices fall below these fundamentals. A scenario would be that dominant miners operate at losses to “ruin” competitors. However, this strategy needs a solid capital base.
Note
Interesting observation:. The Chart showing the hypothetical marginal costs if halving 2020 would have already been implemented. After “Halving” (and constant difficulty) the Anminer S9 needs a BTC price greater than 14k USD to cover electricity expenses. The S15 (or a comparable device) would be in money at the current price and difficulty…
No trading advice!
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