Can Bitcoin mining regain huge profits? Just look at this picture | Planet Map

Author | Little Parker

Editor | Hao Fangzhou

In the previous "Pictures", we listed the electricity cost of mining one Bitcoin in different countries. But it is only the static cost under the conditions of computing power and electricity price at a certain time scale.

If the scope is narrowed to China (referring to the place where the mining machines are deployed) and an average electricity price is set (in fact, the price of bare electricity is basically fixed), the mining cost under historical time (computing power) will form a curve, as shown in the figure below.

What does this curve show?

The time period we selected is from January 1, 2018 to April 23, 2019. The red curve is the average exchange price of Bitcoin, and the other three curves are the mining costs under the managed electricity price of US$0.08/kWh (about RMB 0.54), the highest thermal power bare electricity price of US$0.0697/kWh (RMB 0.45), and the lowest thermal power bare electricity price of US$0.04/kWh (RMB 0.27).

The distance between the red line and the three blue lines represents the gross profit of mining. The four points in the figure represent the following information:

1. Since the beginning of September 2018, the red line has begun to fall below the hosting electricity price cost curve, which means that after this point, if mining is still carried out using electricity prices higher than 0.54 yuan/kWh, it will no longer be profitable.

2. Since mid-November 2018, the red line has begun to fall below the highest thermal power bare electricity cost curve, indicating that after this point in time, if electricity prices are still higher than 0.45 yuan per kWh, mining Bitcoin becomes unprofitable.

3. Since the beginning of April 2019, the red line has begun to exceed the highest thermal power bare electricity cost curve, indicating that after this point, mining with an electricity price of 0.45 yuan/kWh or lower can generate profits.

4. Starting from April 20, 2019, the red line began to be higher than the hosting electricity price cost curve, indicating that after this point, mining with an electricity price of 0.54 yuan/kWh became profitable again.

As can be seen from the figure, the stability of Bitcoin mining cost changes is always higher than Bitcoin price fluctuations.

In fact, we also mentioned in our research report "Bitcoin Mining Industry Turning Point and the Economic Cycle Behind It" at the beginning of the month that the key factors affecting Bitcoin mining are computing power, computing power difficulty and electricity prices. Among them, electricity prices (especially bare electricity) do not fluctuate much because mining contracts are usually in years, and can be regarded as constants. There are generally two reasons for large changes in computing power and computing power difficulty: changes in mining equipment or methods, and halving of Bitcoin block rewards. In addition, the rise and fall of Bitcoin mining will not be higher than the rise and fall of prices.

Therefore, if the price of Bitcoin continues to rise (over $5,785), Bitcoin mining will hopefully return to being a highly profitable industry.