Despite attempts made by the Chinese government on placing ban on Bitcoin trading and ICOs within the country, yet Bitcoin mining has been so profitable in China that the even if the value of Bitcoin falls by half, cryptocurrency miners would still make their profits.
Sophie Lu and other BNEF analysts in a report on Wednesday declared that even at China’s highest regulated electricity tariff, bitcoin miners can make profit from cryptocurrency mining as long as it’s worth more than $6,925. However, bitcoin trades around $14,200 currently, what a huge profit?
The 1,400 percent surge experienced by Bitcoin last year saw a greater demand for electrical power to run the computers used in the Bitcoin mining. Almost three-quarters of those mining machines ended up in China, the world’s largest electricity user, which is now seeking a way to discourage the practice given a surge in power use in some provinces.
Irrespective of the electricity price in China – Discounted rate $0.03/kwh; wholesale $0.06/kwh; industrial $0.13/kwh – Bitcoin’s rise in price makes bitcoin mining very profitable.
According to Lu:
“Bitcoin mining under the current price is likely to be profitable under any electricity price regime in China.”
Cryptocurrency power use is facing more scrutiny, especially in China, where bitcoin miners are taking advantage of low electricity prices. Cryptocurrency transactions require energy-intensive computer networks, with the industry now using as much power as would be used by 3.4 million households in the US, according to Digiconomist Bitcoin Energy Consumption Index. China has declared that it is planning to limit power use by bitcoin miners, who have started to look elsewhere.
According to the report, in China, bitcoin miners used about 15.4 terawatt hours, which is just a blip in the country’s massive power industry. Even though it plays host to the world’s biggest community of bitcoin miners, they only used almost 0.2 percent of the country’s annual electricity production.
It’s difficult to predict how much power will be used to mine bitcoin in the future, Lu wrote, as it depends on how efficient the computers running the complex calculations needed for mining become and how many additional computers will be used in the process. Miners earn bitcoin-denominated rewards for performing the complex calculations needed to confirm transactions in the cryptocurrency.
Even when mining is profitable at the highest regulated electricity price of $0.13 per kilowatt-hour in China, many companies still take advantage of overcapacity in the power-generating sector to negotiate rates as low as $0.03, Lu wrote. Lu added that break-evens are achievable even at $3,869 at those power prices.
Lu also added that if China implements its plan to restrict bitcoin miners’ power use, miners could easily move to new regions. The machines used in mining aren’t expected to last more than two years and the other equipment involved in mining are relatively cheap.
“The overall threat to the sustainability of the global bitcoin network may not be so drastic,” Lu said.
This is happy news for bitcoin miners and if you want to join the miners, head on to China for cheap bitcoin mining.