The Bitcoin mining breakdown: Is mining still profitable?

Oscar Delgado-Mohatar, Marta Felis-Rota and Carlos Fernández-Herraiz

Economics Letters, 2019, vol. 184, issue C

Abstract: We provide an updated estimation of the energy consumption of the Bitcoin network, and a calculation of the evolution of the production cost of Bitcoin over time. Using these data, we conclude that since June 2018 Bitcoin mining is no longer profitable for commodity miners without access to electricity prices below 0.14 $/kWh. This phenomenon explains why many Western miners have dropped out of the circuit, further increasing the centralization of mining activity in China. In addition, we estimate that the marginal cost of the production of bitcoin is around 1,952 US dollars. Below this price the cost of mining would not be profitable, even with the most efficient equipment and the lowest possible price for the energy required. This could lead to a massive exit of the biggest mining players, with unpredictable consequences for the future of this cryptocurrency.

Keywords: Bitcoin; Cryptocurrency; Cost–benefit analysis (search for similar items in EconPapers)
JEL-codes: G13 G17 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176519302034
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:184:y:2019:i:c:s0165176519302034

DOI: 10.1016/j.econlet.2019.05.044

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().