The cost of mining one Bitcoin has seen a significant shift following the halving that took place in April. In fact, eight countries with affordable electricity have already implemented bans on BTC mining, highlighting the evolving landscape of the industry.
Once considered a lucrative endeavor for early adopters, mining Bitcoin (BTC) has become a more challenging and costly process post-halving, as revealed in a recent study by NFT Evening.
For instance, individuals in Ireland now face expenses of approximately $321,112 to mine a single Bitcoin, while the cost in Iran stands at around $1,324. Even in the United States, where Bitcoin mining activity is significant, miners experienced a 50% loss when the price of Bitcoin dropped to $57,909 last month due to high energy costs.
Bitcoin operates on a proof-of-work consensus model, a design conceptualized by its mysterious creator, Satoshi Nakamoto. This model requires network participants to dedicate computing power to solve complex mathematical problems in order to earn block rewards denominated in Bitcoin, thereby introducing new tokens into circulation until the fixed supply limit of 21 million BTC is reached.
Global BTC mining energy cost post-halving | Source: NFT Evening
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Bitcoin mining profitability in strict regimes
Interestingly, Bitcoin mining remains highly profitable in countries where the cryptocurrency is banned. More than 20 Asian countries, including China, which has taken an anti-BTC stance, offer energy pricing systems conducive to Bitcoin mining. Additionally, five African nations provide affordable power packages, making countries like Ethiopia, Sudan, and Libya attractive destinations for both individual and institutional miners.
On the contrary, several European countries face challenges with high energy tariffs, thereby increasing the barrier to entry for BTC mining. The NFT Evening report indicates that mining one Bitcoin in countries like Germany or the U.K. could cost up to five times the current value of the asset.
The halving event, occurring every four years, has significantly impacted the $2 billion Bitcoin mining industry. Nakamoto’s design aims to restrict the influx of new Bitcoin into circulation by halving block rewards every four years, resulting in miners receiving fewer tokens for their computational efforts.
As a result of the halving, participants in the mining sector are now exploring opportunities in low-energy countries to avoid legal repercussions, particularly in jurisdictions like China where strict regulations are enforced.
Even institutional miners have had to adapt to the changing landscape. In May, shortly after the halving, Bitcoin mining company Stronghold considered selling its operations as industry players adjusted their strategies to remain viable. Competitor Bitfarms reportedly expressed interest in acquiring Stronghold to enhance its mining capacity.
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