This average price incorporates more expensive residential and commercial prices, but when taking only average industrial prices for all states ($0.09 in October), the average cost of mining one Bitcoin is still $86,931.
US miners pivot to AISpeaking to Decrypt, Canaan’s VP of Capital Markets and Corporate Development, Leo Wang, said that miners who have taken on too much debt to operate, or who have deployed overpriced or “quickly obsolete” hardware, have faced the prospect of unprofitability in recent years and months.
However, he affirmed that Canaan has taken strategic decisions to reduce its risk profile, including an avoidance of excessive debt, as well as the design and sale of its own mining hardware, so as to generate cash flow and offset expenses.
He said, “We try to keep our power price below 4 cents/kWh, which has historically been sustainable through bear markets, maintain daily operational oversight with partners, and deploy machines only when power and operations are fully ready.”
Canaan also maintains hosting agreements that give it the right to reduce or close operations in particular locations, assuming that the economics no longer work.
“From lower-cost markets to off-grid energy operations in Canada, our global footprint and technical capabilities also allow us to explore new energy sources and energy reuse, which reduces our reliance on any single grid or power source over time,” he added.
More generally, Digiconomist founder Alex de Vries notes that, while computational difficulty has peaked recently, the declining price of Bitcoin is making things increasingly difficult for miners.
“You can do the math yourself considering it takes about 1.2 million kWh to mine one Bitcoin at the moment,” he told Decrypt. “At a price of $85k per coin, anything above just 7 cents per kWh in costs will put you at a loss.”
De Vries concluded that Bitcoin mining being unprofitable will “actually be very common in most places,” since very low rates are not easy to secure. (these ultra low rates are not easy to get).
“That’s still quite some time,” De Vries said, “but without substantial increases in the price level by then the miners would get squeezed even further.”
