Bad news for Bitcoin miners: Bitcoin mining may no longer be profitable

According to CNBC, some experts believe that Bitcoin has fallen to a level where it is no longer profitable to create Bitcoin .

In a report released on the 15th, Fundstrat’s Thomas Lee pointed out: “Currently, Bitcoin trading is basically carried out at the cost of breaking even for Bitcoin mining. Based on the mining model developed by our data science team, the cost of breaking even for Bitcoin mining is $8,038.”

Fundstrat’s model incorporates three factors: equipment costs, electricity and other expenses including maintaining cooling facilities.

According to CoinDesk's Bitcoin Price Index, the price of the cryptocurrency fell slightly on the 15th, approaching $8,000. It is reported that this price index tracks prices from four major global exchanges. Data released by CoinDesk showed that Bitcoin had previously hit a low of $7,676.52, the lowest level since February 8.

Bitcoins are created through an energy-intensive process called "mining." This process uses high computing power to solve complex mathematical equations to prove that an anonymous miner has created a blockchain record of transactions using the network. Miners are then rewarded with Bitcoins after successfully completing the equation.

If the cost of creating Bitcoin exceeded the reward, then miners would theoretically lose motivation.

“In some cases, miners may shut down their machines until prices recover a bit,” said Sean Anstey, co-founder and president of Blockchain Intelligence Group. “That would certainly cause some of them to lose money.”

Currently, bitcoin mining requires custom hardware that can cost hundreds to thousands of dollars. Like many technologies, more efficient equipment is constantly being developed. Sam Doctor, head of quantitative data science at Fundstrat, said that according to Fundstrat's model, the need to regularly replace equipment accounts for at least half of mining costs.

According to Charlie Hite, CEO of industry data website CryptoCompare, miners' income has roughly halved since December due to a surge in interest in bitcoin mining. The median transaction fee, another source of income for miners, has also fallen from $34 in late December to below 50 cents, according to data provided by bitinfocharts.

For traditional commodities such as gold, when its price equals the cost of production, some speculators believe that the precious metal may be close to a bottom as supply decreases. However, Bitcoin may be more complicated. For example, the cost of mining Bitcoin still varies greatly around the world due to different electricity costs.

The price at which most miners really start to shut down operations is around $3,000 to $4,000 per bitcoin, said Docot, who noted that bitcoin transaction costs were breaking even in January 2015, when the cryptocurrency was trading near $200.

Bitcoin started out slowly rising before accelerating in its most recent rally. It has since lost more than half its value.