Data
suggests
the
average
cost
of
mining
Bitcoin
is
standing
around
$86,700
right
now.
Here’s
what
history
suggests
could
happen
next
for
BTC.
Bitcoin
Average
Mining
Cost
Is
Currently
Notably
Higher
Than
The
Price
In
a
new
post
on
X,
analyst
Ali
Martinez
has
talked
about
how
the
average
mining
cost
of
BTC
is
looking
like
right
now.
The
Bitcoin
network
runs
on
a
consensus
mechanism
based
on
the
“proof-of-work”
in
which
validators
called
the
miners
compete
against
each
other
using
computing
power
to
get
to
hash
the
next
block
on
the
chain.
This
computing
power
naturally
has
its
running
cost,
with
electricity
being
the
most
notable
expense
that
the
miners
have
to
pay,
given
that
it’s
a
perpetual
cost.
The
incentive
for
spending
capital
on
mining
operations
lies
in
the
block
rewards
that
these
validators
receive
upon
successfully
adding
the
next
block.
Obviously,
mining
expenses
are
different
depending
on
location,
as
electricity
prices
aren’t
the
same
everywhere.
As
such,
the
chart
that
Ali
has
cited
from
MacroMicro
uses
data
provided
by
the
Cambridge
University
on
BTC
electricity
consumption
to
find
out
an
average
value.
Related
Reading
Below
is
the
chart
in
question,
which
shows
how
the
average
mining
cost
on
the
Bitcoin
network
has
changed
over
the
past
few
years.
value
of
the
metric
appears
to
have
gone
up
in
recent
months
|
Source:
@ali_charts
on
X
As
is
visible
in
the
above
graph,
the
Bitcoin
average
mining
cost
(colored
in
blue)
had
been
below
the
price
of
the
cryptocurrency
earlier
in
the
year,
but
recently,
the
former’s
value
has
spiked
and
has
surpassed
the
latter’s.
The
reason
behind
this
sudden
increase
is
that
there
is
another
variable
at
play
when
calculating
the
average
cost
of
mining
Bitcoin:
the
Issuance,
or
the
number
of
tokens
that
the
miners
are
minting
daily.
In
general,
the
block
rewards
stay
fixed
both
in
value
and
frequency,
so
the
Issuance
of
the
network,
which
is
nothing
else
than
the
sum
of
the
block
rewards
mined
in
a
day,
more
or
less
remains
fixed
as
well.
Specific
events,
however,
don’t
abide
by
this.
They
are
the
Halvings.
These
periodic
events
that
take
place
approximately
every
four
years
permanently
slash
the
block
rewards
in
half.
The
latest
such
event,
the
fourth
ever
in
the
cryptocurrency’s
history,
occurred
back
in
April.
Naturally,
the
Halvings
mean
that
the
cost
of
mining
1
BTC
drastically
goes
up,
as
miners
only
get
half
as
many
rewards
as
before
after
doing
the
same
amount
of
work.
Thus,
it’s
not
surprising
that
the
cost
of
production
for
the
coin
observed
a
sharp
increase
coinciding
with
the
latest
Halving.
At
present,
this
metric
stands
at
$86,700,
meaning
that
according
to
MacroMicro’s
model,
the
average
miner
would
be
underwater.
Related
Reading
Based
on
the
past
trend
of
the
indicator,
Ali
has
identified
a
pattern
that
Bitcoin
has
always
followed.
“Historically,
BTC
always
surges
above
its
average
mining
cost!”
notes
the
analyst.
As
such,
if
this
pattern
continues
to
hold
for
the
current
cycle
as
well,
then
it
may
only
be
a
matter
of
time
before
Bitcoin
surges
past
the
$86,700
mark.
BTC
Price
Bitcoin
has
gone
through
a
drawdown
of
more
than
5%
recently,
which
has
brought
its
price
under
the
$66,000
level.
like
the
price
of
the
asset
has
observed
bearish
momentum
recently
|
Source:
BTCUSD
on
TradingView
Featured
image
from
Dall-E,
MacroMicro.me,
chart
from
TradingView.com
Go to Source
Author: Keshav Verma
