Crypto Mining Activities Become Profitable Again With the Latest Bitcoin Price Rally
Bitcoin’s (BTC) price action towards $5,000 has been very positive for the digital currency market. It did not only improve the sentiment in the space, but it has also helped crypto miners to become more profitable. The cryptocurrency market analyst Alex Krüger believes that the Bitcoin mining operation breakeven is currently close to $3,550.
Mining Activities Become More Profitable
According to Alex Krüger, the Bitcoin mining difficulty has increased during the past weeks after the most popular digital asset bottomed in December 2018. This is related to the fact that after a massive sell-off in the market, mining activities became highly inefficient. A large number of miners had to turn off their machines and leave the market. However, as the asset started growing once again, new miners entered the space.
The bitcoin mining operational breakeven for efficient mining operations currently stands around $3550. pic.twitter.com/gQrNYBcvLH
— Alex Krüger (@krugermacro) April 21, 2019
Back in December 2018, the breakeven cost when the market fell to $3,200 it was $3,850. That’s a large difference. Indeed, many miners were operating at a loss. Now, the breakeven is $3,550 but Bitcoin has a price of $5,300.
The analyst explained that he calculated the expenses based on an electricity rate of 5.5 cents per kWh. That means that the breakeven cost could vary according to power rates. As he explained, the breakeven cost is highly dependent on electricity costs.
There are some Chinese miners that are currently paying 3.5 cents per kWh and they have large mining operations. If we follow the expert’s assumptions, mining a Bitcoin in some mining farms provides $2,000 in net profits.
A few days ago, a report spread regarding a possible ban on Bitcoin mining activities in China. If that happens, the market would probably crash. Miners would have to liquidate their BTC and this would not be very positive for Bitcoin’s security, considering that over 70% of the Bitcoin mining activities take place in China.
The hash rate will clearly fall if China bans mining in the country. This could have a negative effect on the network since other parties could perform a 51% attack on Bitcoin. There are some countries that could be attractive for miners, including Canada and Russia, Scandinavia or even Patagonia in Argentina.
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