As an ever-evolving industry, Bitcoin mining is always experiencing changes. From electricity cost increases to regulatory actions, Bitcoin miners in the US have seen many difficulties over the past year. In spite of the volatility, however, bitcoin miners in the United States have seen success in the first quarter of 2023, with one BTC now costing upwards of $17,000 to produce.
The Hashrate Index reported that the average hashprice, or the USD price per tera-hash per second per day (TH/s/d), rose 31% in Q1 of 2023 due to Bitcoin’s price recovery towards $30,000. The past year saw the hashprice drop by 58%, largely due to the bear market conditions and increased electricity costs across the United States, which rose an average of 10.71% throughout the states, higher than the average consumer price index increase of 6.4%.
US Miners Find Cheapest Electricity in South and Midwest
The research suggests that miners turned to the South and Midwestern United States to take advantage of the cheapest electricity and gain the best margins. New Mexico offered the most profitable environment for Bitcoin miners in the quarter and saw them extract a BTC for $16,850. However, the opposing side of the coin is that miners in Hawaii had to pay almost seven times as much, with a BTC cost of $114,590.
The United States Energy Information Agency has since estimated that demand for electricity will drop 1% in the second quarter and that natural gas prices will remain below $3 from an average of $6.45 the year prior. This information has been encouraging for miners, as it offers the promise of lower operational costs and potentially better margins in the future.
US States Take Steps to Protect Crypto Miners from Taxes and Regulations
A number of U.S. states, including Arkansas, Montana, Missouri, Mississippi, and others, have taken steps to protect crypto miners from excessive taxes and regulations. Texas has revised its utilities and tax codes, diminishing the provisions for crypto mining companies. However, not all mines have received aid.
Public miners have especially felt the burn in the past year, with pure-play mining stocks experiencing barely breaking even or plummeting by over 90%, such as those of Core Science and Greenidge Generation, respectively. This is further compounded by the rising premium on ASICs, which has decreased the return on investment of these services.
Ethereum Miners Suffer Revenue Loss as Network Shifts to Proof of Stake
The situation was more severe for Ethereum miners, as the network moved to its proof of stake consensus mechanism in mid-September. This effectively ended generations of Ethereum mining, while leaving Bitcoin’s mining industry running. Despite Ethereum’s lack of proof of work, miners still generated approximately $8.87 billion dollars in revenue, falling short of Bitcoin miners’ $9.55 billion.
The Bitcoin mining industry is now showing signs of life with the start of the new year, with mining revenue rising by 50% in US dollars. With the hashrate also reaching heights of 300 exahashes-per-second, miners in the United States are facing a newfound hope that has been buoyed by the initiative of cutting-edge power developers who are pivoting to greener energy.
Promising Future for Bitcoin Mining in the US
The future of Bitcoin mining in the United States is looking brighter than ever. With states loosening regulations, energy costs deflating, and miners taking proactive steps to find sustainable energy sources, Bitcoin mining is becoming a more attractive option. This will lead to healthier margins and make Bitcoin mining in the United States a more viable option. With the right steps, miners can ensure that their operations are sustainable and profitable.
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