The Cost of Bitcoins’ Mining Today. What Determines The Mining of BTC?

Well, let’s talk about mining, again? We will talk about what affects its prime cost, we will consider the list of countries where it is the most profitable (and vice versa, absolutely illiquid) to engage in the extraction of digital coins, and also talk a little about the near future of such activities.

Content:
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  1. What is the process of mining digital coins?
  2. What factors influence the price of mining?
  3. Countries where it is the most profitable to engage in the production of cryptocurrency
  4. Forecasts for liquidity of mining for the next couple of years
  5. Conclusion

1. What is the process of mining digital coins?

First of all, let’s take a very brief look at what mining is in general and how it happens? Digital coins are built on the basis of blockchain technology, which implies absolute equality and decentralization. In the Bitcoin network or network of any other coin, there are miners who are responsible for the correctness of its work, and in exchange, the network provides them with a reward in the form of coins. In simple terms, the person who is engaged in mining must provide the network with computing equipment; the more powerful it is, the more coins will be obtained.

2. What factors influence the price of mining?

Like in any other business, in the mining of bitcoin, and of any other coin, there is such a thing as prime cost. The final production price is influenced by several factors:

  • the cost of electricity;
  • the cost of equipment (it can vary significantly depending on the country where to buy, it is the cheapest in China);
  • the cost of repairs.

One should not treat mining as a passive source of income. In order to get the maximum profit from such an enterprise, you must constantly devote time to it. For example, eventually, the complexity of networks of popular coins will inevitably increase. For this reason, it is necessary to upgrade your equipment constantly and most importantly in time. It is also necessary to take into account the fact that video cards or ASIC-miners will work flat out 24/7. For this reason, they will need constant care and timely replacement of components.

3. Countries where it is most profitable to engage in the production of cryptocurrency

It’s not a secret that miners consume just a huge amount of electricity. According to Digiconomist, about 31 terawatt hours are spent annually on bitcoins, which is 0.14% of the total energy consumption of mankind. The prime cost of this amount of electricity costs about one and a half billion dollars.

As you know, electricity in different countries of the world has a completely different cost. It follows that the main item of expenses for mining can vary significantly depending on geography.

In the first quarter of 2018, a study of how the cost of BTC mining differs depending on government tariffs was conducted. The data that was received shocked a little by its magnitude of the difference. So, the most unfavorable country for installing a mining farm is South Korea, on its territory to get one BTC costs as much as $26,170.

In the US, this indicator varies from state to state, but the average cost of producing one bitcoin is $4,758.

In the framework of this study, a total of 115 countries were considered and among them, there are five leaders in which mining of Bitcoin is the cheapest:

  1. Venezuela is the undisputed leader with its indicator of 531 dollars;
  2. Trinidad – $1,190;
  3. Uzbekistan – $1,788;
  4. Ukraine – $1,852;
  5. Myanmar – $1,983.

coin bitcoin mine

4. Forecasts for liquidity of mining for the next couple of years

Although for the last 7 months we have seen a significant decline in investors’ interest in digital coins, mining is still a fairly promising activity. The largest miners in the world still invest hundreds of millions of dollars in building new enterprises. Based on this, we can conclude that the rate of BTC/USD will still reach new horizons.

5. Conclusion

The extraction of digital coins is a multi-billion industry, which in 2017 showed a profit of 7.2 billion dollars. The price of electricity significantly affects the prime cost of mining and it can differ dozens of times in some countries.

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