Mining deficit may lead to the collapse of the virtual currency system

Electricity consumption continues to rise, the cost of mining exceeds the price, various problems can no longer be ignored, and the crisis of virtual currency system collapse may be coming.

Cost > Benefit becomes a reality

Bitcoin accounts for a significant portion of electricity consumption worldwide, and in reality, the chances of Bitcoin mining running into deficit are increasing.

The price of Bitcoin has reached its peak and then dropped to the bottom. Bitcoin mining and trading require huge electricity costs, and in order to shorten the mining time, computers must be frequently replaced and cooling devices must be installed. These have led to higher and higher costs for Bitcoin mining and lower and lower profits. Some analysts have previously suggested that mining is unprofitable when 1BTC = $6,500.

Robert Kelly, a cryptocurrency analyst, also pointed out that in order to make a profit, computers and other electronic equipment must be replaced every year and a half. The average cost of replacement is about $6,500.

In addition to the cost of electronic equipment, electricity costs are also quite high. Electricity costs in Germany and Denmark are particularly high, at around $4,000. In comparison, electricity costs in the United States are relatively low and will not become a big problem, but if the price of Bitcoin continues to fall in the future, the situation of the virtual currency market in the United States will not be optimistic.

In addition to Bitcoin, other currencies also face the same problem

The amount of electricity consumed by Bitcoin mining and trading has increased dramatically, and now this figure is equivalent to 0.5% of the world's electricity generation. The amount of electricity required for a Bitcoin transaction is equivalent to the electricity used by an average Dutch household in a month.

In addition to Bitcoin, other currencies are also facing the same problem. The prices of other virtual currencies are also falling, so the entire virtual currency system will face the crisis of collapse. Moreover, as the price of virtual currencies continues to fall, new mining companies will also think twice before entering the market.

The peak has long passed the trend of virtual currency

Price charts of Bitcoin (left) and Ethereum (right)

IOTA price chart

The above is the trend chart of Bitcoin, Ethereum and IOTA. If the price continues to fall, it will become more difficult to maintain the entire virtual currency system.

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