It costs $1,190 to mine one Bitcoin right now, but Chinese miners may be an exception

Bitcoin has been hit hard in 2018, losing 70% of its value in the first three months of the year. Investors who didn’t sell their Bitcoins when the price of Bitcoin rose to around $20,000 in late 2017 are now very frustrated and are probably wondering when this nightmare will end.

If bitcoin investors are feeling the bitcoin fever, so are bitcoin miners.

Investing in Bitcoin is a very simple thing. You just need to buy digital tokens, and then seize the opportunity to sell them when the price rises to make a lot of money. In contrast, Bitcoin mining is not so simple.

To mine, miners need high-end, power-hungry GPU hardware. Whether a mining operation is profitable depends not only on the price of the cryptocurrency, but also on the cost of the hardware, the power consumption, the efficiency of the hardware, and the fees charged by the mining pool. Large mining hardware emits a lot of heat, so the cooling cost is also high.

So, is Bitcoin mining still profitable now? The answer is no.

Most bitcoin mining costs are stable and not difficult to determine. Tom Lee of consulting firm Fundstrat Global Advisors said that bitcoin miners can break even when the price of bitcoin is $8,038. This means that based on the bitcoin price on April 1, miners currently lose about $1,190 for each bitcoin mined.

If you have mining equipment at home, you can calculate your mining profits using an online calculator.

Assuming you have the most powerful and efficient mining rig available - AntMiner S9 (costs $2000), with an execution speed of 13.5 Tera-Hash/second, an energy consumption of 0.098 Watts/Gigahash (full power is about 1400 Watts), a mining pool fee of 2.5%, and electricity costs of $0.06/kWh, at current Bitcoin prices, you will lose about $380 after a year of mining (calculated using the 99Bitcoin calculator).

Due to the higher hardware costs, you shorten your mining period, which increases your losses. All else remaining the same, your breakeven price is $7,842, which still means you will lose a lot of money at current Bitcoin prices.

However, it is important to note that these breakeven prices only apply to small mining operations. Electricity costs make up a large portion of mining costs. If you have access to cheap electricity, you can continue to make a profit even if the Bitcoin price is lower than it is now. Assuming other things remain the same, at the current Bitcoin price, you would need to reduce your electricity costs to $0.028 to break even.

That’s why Chinese miners are likely to be the last wave of miners, as they have access to cheap hydroelectricity. Perhaps only when the price of Bitcoin drops to $3,000-4,000 will Chinese miners retreat.