Mining Costs Continue To Drop Amidst Bitcoin Stabilization Around $4,000

Mining Costs Continue To Drop Amidst Bitcoin Stabilization Around $4,000

November was clearly not a good month for the virtual currency space. Until now, December has been very quiet and calm in terms of volatility and price swings in the crypto market. Bitcoin (BTC) is being traded close to $4,000 and the cost of mining is getting reduced.

During the last few weeks, Bitcoin went down from $6,300 to $3,500 in some exchanges. This establishes a new low in more than a year. This has also led to a bigger problem in the space. Miners were stopped being profitable. There were some reports of miners in China to shut down their operations.

It is possible to see that Bitcoin’s hash rate got reduced almost 50% since its all-time high registered a few months ago in August. As the price of Bitcoin fell, difficulty in the network has also been reduced. Helping miners to be profitable with lower prices.

Before the network adjusted its difficulty, several analysts warned about the unprofitability of mining Bitcoin, something that would make mining this virtual currency more expensive than the reward provided by the network.

During a conversation with MarketWatch, Sam Doctor, the head of data science at Fundstrat Global Advisors, mentioned that miners are recovering from the losses in which they incurred from mining BTC.

Back in September, Sam Doctor commented:

“Our model suggests the cash cost of mining each BTC on the Antminer S9 is now $4,500, down from $5,300 in September. Depreciation expense has fallen to $1,300 vs $2,000 in September, reflecting a lower rig cost as newer devices have come to market. Fully loaded breakeven is now $5,700, compared with a breakeven of $7,300 in September.”

A few days ago, the second largest drop in mining difficulty on the Bitcoin network was registered. The difficulty changed -15.1%. Back in November 2011, Bitcoin’s difficulty went down 18%.

This is one of the most interesting things about Bitcoin. If the hash rate drops, difficulty also does, allowing more miners to become profitable during hard times.

In the last 24 hours, Bitcoin lost 2.77% of its value and it has a market capitalization of $67.75 billion. Each BTC can be purchased for $3,891 according to CoinMarketCap.