Bitcoin (BTC) is squeezing its miners this month as suppressed prices threaten to impact profitability.
The latest data shows both narrowing profit margins and miners waiting longer to recoup their initial investment.
Miner production cost faces off with BTC price
While Bitcoin miners have largely held off on major distribution as BTC/USD descends from all-time highs, the picture now appears precarious.
Calculations from on-chain analytics platform CryptoQuant reveal that miners’ production price — how much it costs to mine a single bitcoin — could be right where current spot price resides.
While “raw” costs may be around $22,000 per BTC for miners in North America, which is home to the lion’s share of hashing power, additional costs could put the total at more like $30,000.
“We estimate cost basis for bitcoin miners in North America around $22K per bitcoin mined. This estimate includes the direct cost of mining and S&A expenses. It does not include depreciation and amortization charges,” CryptoQuant senior analyst Julio Moreno confirmed to Cointelegraph in private comments.
“If depreciation and amortization charges are included then the cost basis for mining bitcoin is at around $30K, basically at the same level as current bitcoin price.”
Bitcoin miner exchange flows vs. BTC/USD chart. Source: CryptoQuant
Fears of a “capitulation” event among miners should spot price deteriorate remain a talking point. So far, however, only the May dip below $24,000 saw a noticeable reaction from the mining community.
“Our data shows increasing bitcoin flows from miners to exchanges during March 2022 and then a sharp spike in flows during the first week of May. This is in line with bitcoin selling reported by some mining companies in Q1 2022,” Moreno added.
In January, miners’ production cost appeared to be at around $34,000, separate data showed.
Bitcoin miner ROI expands in May
Continuing, mining firm Luxor’s Hashrate Index metric produced more interesting insights.
Related: Bitcoin miners say NY ban will be ineffective and ‘isolate’ the state
The Index, which shows the current price in USD per terahash (TH) according to ASIC miner efficiency, confirms that that cost area has been decreasing incrementally since December 2021.
At the same time, findings by Twitter user @XBTJames show, the time taken for the average participant to enter profit by seeing return on investment (ROI) is expanding.
ASIC pricing, measuring in USD-per-TH, has been coming off materially since late-2021, but pricing measured in static days-to-ROI (ASIC USD price-per-TH / USD daily revenue-per-TH [aka ‘hashprice’]) tells a different story. pic.twitter.com/uFx19GRa2w
— XBT James (@XBTJames) May 27, 2022
“Time to ROI has been increasing steadily since the ‘China Ban’ ASIC firesale last year. While USD pricing on ASICs has come down, the selloff in BTC and the increase in difficulty have combined to severely impact mining profitability,” the account explained in a series of tweets.
XBTJames added that higher BTC prices would be needed to reduce the pain for miners, including new market players and those looking to expand their hashing capabilities.
Bitcoin ASIC Price Index vs. BTC/USD chart (screenshot). Source: Hashrateindex.com
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