Key facts:
- In 2023, the profitability of miners increased due to several factors.
- However, electricity costs make mining more expensive.
The costs of mining a unit of bitcoin (BTC) have doubled, or even tripled, in the United States. Whereas a year ago it was necessary to spend between USD 5,000 and USD 10,000 per bitcoin, now it costs USD 17,000 in the cheapest state in that country.
This was explained on Twitter by Jaran Mellerud, a member of the team at the Bitcoin mining company Luxor and the Hashrate Index mining analysis and statistics site. Precisely, a detailed report from the Hashrate Index corresponding to the first quarter of 2023 gives more details on the subject.
Both sources detail that the most expensive state in the continental United States for Bitcoin mining is Rhode Island, costing $62,154 per bitcoin. If the entire US territory is taken into account, the island of Hawaii far exceeds all other states, costing $114,587 per bitcoin.
Regarding the cheapest states, New Mexico (USD 16,850), Idaho (USD 17,220), Iowa (USD 17,677) and Oklahoma (USD 18,218) stand out. There are several more under $20,000 per Bitcoin, and they are West Virginia, Tennessee, Alabama, Arkansas, North Dakota, Texas, Wyoming, and Washington.
Although not explicitly detailed in the report, it is understood that the rise in Bitcoin mining costs is mainly related to increases in electricity rates.
Some states, such as Arkansas, have recently legislated in favor of Bitcoin mining, but overall, the country is experiencing a tightening of regulations towards the cryptocurrency industry in general.
Bitcoin mining is having a positive year
The situation described above occurs in the context of growth for Bitcoin mining. In 2023, the cryptocurrency had an appreciation of approximately 75%, which clearly favored miners by revaluing the rewards they get for their contribution to the network.
This generated that, despite the fact that electricity costs rose in many countries, the profits for miners increased. The report cites the example of the mining company Riot.
Thanks to the aforementioned increase, the profits of this company went from USD 4.6 million to USD 10.4 million between the end of 2022 and the beginning of 2023.
In addition, as reported in Market Times, metrics such as hashprice and hashrate have increased so far this year. The first indicates that profitability is higher, while the second shows that more miners have connected to the network, which also reflects the positive moment the industry is going through this year.
Finally, events such as the emergence of Ordinals non-fungible tokens (NFTs) have boosted fee income for miners. The final ingredient for numbers in the green seen through at least April 2023.
