Bitcoin storage costs have been increasing steadily in the last few years and at the moment it is estimated to be 2.1% per year for Bitcoin, reported BTC developer Tamas Blummer.
According to an independent Bitcoin developer and researcher, Tamas Blummer, the costs of storing Bitcoin is mostly overlooked. In a post published by Medium, Blummer revealed that the cost, mostly referred to as carry for other assets, currently stands at 2.1% per year.
Blummer explained that the most common cost for Bitcoin storage was the expenses involved in moving the king coin in and out of the wallets. He added that these costs are paid by individuals moving the coins and are proportional to the size of the byte of the transaction involved rather than the amount being moved.
As per the post, the total amount of Bitcoin paid in as transaction fees was estimated to be about 50,000 in 2016, however, the fees has increased to more than 200,000 BTC this year.
Blummer explained that there are other factors driving up the costs. One of them is capital inflow. He explained that newly mined coins enhance the market supply and subsequently lower the value. During a bull market, fiat currency enters the crypto markets while during the bear market it leaves the market.
Additionally, Blummer explained that mining costs also has an effect on price movements. This is because miners are always looking forward to sell more of their coins to balance their expenses. In this case, the profit levels will depend on the mining difficulty. When market prices are unable to sustain production, the mining process will go down and reduce competition. In such scenarios only the miners with the best equipment and cheap sources of power are able to survive.
To arrive at the 2.1% estimate, Blummer took the price of BTC to be $8400 and the cost of mining to be $5000, with 12.5 BTC per block. This makes a profit of $9 million daily going by the current market rates. He then divided the figure by the current Bitcoin market cap which is $150 billion which comes to 2.19% storage figure.