Latest report: 80% of Bitcoin mining uses renewable energy, but ordinary miners are "operating at a loss"

Bitcoin mining could be losing money for most miners at current prices, according to a new Bitcoin mining report released by CoinShares.

Ordinary miners "operate at a loss"

In a “white paper” that has been highly praised by cryptocurrency insiders, CoinShares examines various aspects of bitcoin mining, a topic that has become increasingly discussed in recent weeks as the price of bitcoin has fallen from $4,184.78 to a low of $3,500.

“Based on our findings, we found that at 5 cents/KWh and an 18-month depreciation schedule, the total marginal cost of mining has increased from about $6,500 to about $6,800 since May, based on the market average,”

This suggests that at current prices, the average miner is: operating at a loss. Mining revenue cannot cover capital expenditures when electricity costs are close to 3 cents/KWh, mining equipment depreciation period exceeds 24-30 months, or the cost of paying for mining equipment is less than we estimated.

80% of Bitcoin mining relies on renewable energy

Mining companies appear to be experiencing considerable financial difficulties as a result of the price drop, regardless of electricity prices in their location.

Last week, photos of what were allegedly Chinese miners selling off unprofitable mining machines appeared on social media, as the onset of the dry season pushed up the cost of hydropower, causing headaches for miners.

Additionally, it’s worth noting that Bitcoin mining difficulty is set to drop for the first time since December 2, 2011.

CoinShares said that in the future mining will continue to focus on the cheapest energy, primarily renewable energy.

The researchers concluded:

“Based on historical data on China’s energy mix and the geographic location of cryptocurrency mining operations, our findings have shown that, contrary to common claims, the vast majority of global Bitcoin mining activity (minimum 77.6%) is based on renewable energy.”

Saifedean Ammous, author of “The Bitcoin Standard,” responded by saying he agreed with the findings, adding that he would publish “the first in-depth analysis of the [economics] of bitcoin mining” on Friday.