{"id":390801,"date":"2023-05-01T09:29:32","date_gmt":"2023-05-01T09:29:32","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=390801"},"modified":"2023-05-01T09:41:35","modified_gmt":"2023-05-01T09:41:35","slug":"bitcoin-mining-cost-in-the-us-spikes-from-5000-to-17000-in-2023","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/bitcoin-mining-cost-in-the-us-spikes-from-5000-to-17000-in-2023","title":{"rendered":"Bitcoin Mining Cost In the US Spikes From $5,000 to $17,000 In 2023"},"content":{"rendered":"

Bitcoin mining<\/span> is a process where miners solve complex mathematical equations to produce new blocks and earn rewards. These equations are tackled with supercomputers running on massive amounts of electricity.\u00a0<\/span><\/p>\n

Recently, the price of Bitcoin mining in the United States <\/span>increased drastically<\/span><\/a> due to rising electricity costs. <\/span>Quick Electricity<\/span> reports that tariffs increased between January 2022 and January 2023. According to the report, they increased at an average of 10.71% per state, higher than the <\/span>Consumer Price Index (CPI)<\/span> increase of 6.4%.\u00a0<\/span><\/p>\n

Presently, it costs miners a minimum of $17,000 to successfully mine one BTC. This is an alarming increase compared to the $5,000 – $10,000 price level a year ago. Luckily, BTC<\/a> mining profitability has risen, especially in states with lower electricity costs across the U.S.\u00a0<\/span><\/p>\n

Some miners recorded profit in Q1 of 2023 as Bitcoin touched the $30,000 price level.\u00a0<\/span><\/p>\n

Rising Mining Costs Affected Mining Corporations In 2022<\/b><\/h2>\n

Core Scientific found itself indebted<\/a> to its energy provider, Priority Power Management. The <\/span>U.S Bankruptcy Court<\/span><\/a> for the Southern District of Texas allowed Core Scientific to transfer $20.8 million of equipment to Priority Power.<\/span><\/p>\n

Core Scientific <\/span>filed for bankruptcy<\/span><\/a> in December last year, with Priority Power claiming the company owed them around $30 million. The Judge presiding on the case <\/span>ruled on a $20.8<\/span><\/a> million settlement for Priority Power in the form of equipment that includes transformers and breakers.\u00a0<\/span><\/p>\n

Core Scientific was not the only corporation affected by the increased hash rates. Individual miners also struggled with <\/span>bankruptcy in 2022<\/span><\/a>, with some miners opting to sell their mining rigs at the height of the crypto winter.\u00a0<\/span><\/p>\n

US States And Bitcoin Mining Prices<\/b><\/h2>\n

New Mexico ranks as the cheapest<\/a> and most profitable state for Bitcoin mining operations in the U.S. This record is for the <\/span>first quarter (Q1) of 2023<\/span><\/a>, and it costs miners $16,850 to mine one BTC. On the other hand, Hawaii is the most expensive state to mine BTC in the U.S. at approximately $114,590 per BTC.\u00a0<\/span><\/p>\n

Some states, such as Missouri, Arkansas, Montana, and Mississippi, have taken bold steps to protect crypto miners from excess taxes. In contrast, Texas has <\/span>adjusted its utilities and tax codes<\/span><\/a> to tighten restrictions for crypto mining companies.\u00a0<\/span><\/p>\n

Electricity tariffs and prices<\/span><\/a> usually influence mining activities greatly. Currently, the South and Midwestern U.S. states are the most comfortable for miners for electricity bills. Moreover, the <\/span>U.S. Energy Information Association (EIA)<\/span><\/a> believes that <\/span>energy prices will reduce<\/span><\/a> and Bitcoin mining will become more profitable.\u00a0<\/span><\/p>\n

According to the report, a drop in demand for electricity by 1% is expected in Q2, 2023. They believe that additional generation from renewable energy sources and a reduction in the price of natural gas will lead to this drop.<\/span><\/p>\n

The EIA believes that natural gas prices will stay below $3 in 2023 compared to 2022, where it sold at $6.45 on average.\u00a0<\/span><\/p>\n

Bitcoin Hash Rate Rises Indicating A Healthier Network In 2023<\/b><\/h2>\n

Bitcoin’s price experienced a drastic downturn in 2022 as the <\/span>crypto winter<\/span><\/a> swept the general crypto market. The bearish trend saws the asset dip from a <\/span>high of $48,000 to below $15,000<\/span><\/a>, leading to great losses among miners. The miners battled with rising operational costs and diminishing returns.\u00a0<\/span><\/p>\n

However, BTC posted more positive figures in Q1 of 2023 as the U.S. dollar price per <\/span>terahash<\/span><\/a> per second per day (TH\/s\/d) increased. The TH\/s\/d increased by 31% as Bitcoin touched the $30,000 price level before its current retracement.\u00a0<\/span><\/p>\n

Hashrateindex<\/span><\/a> reported that the hash price of BTC in Q1 has increased steadily, with its lowest price recorded on January 1, 2023. The hash price increased by 31%, boosting profits for miners in areas with moderate electricity costs.\u00a0<\/span><\/p>\n

This profitability boosts for miners implies that more miner hardware is now in operation. Also, the 35% increase in Bitcoin’s hashrate increased its <\/span>mining difficulty<\/span><\/a> to 31.6% in Q1.\u00a0<\/span><\/p>\n

Check out our list of Best Bitcoin Mining Sites<\/a> here.<\/p>\n

Hosting Costs Stabilize In The United States<\/b><\/h2>\n

Hosting Marketplaces such as <\/span>Blockware<\/span><\/a> and Compass and other sites like <\/span>Luxor\u2019s ASIC Trading Desk<\/span><\/a> and <\/span>Hashbranch<\/span><\/a> operate in the U.S.\u00a0 They provide retail access to Bitcoin mining hosts worldwide.<\/span><\/p>\n

In the U.S. and Canada, hosting prices are more stable and <\/span>decreasing compared to 2022<\/span><\/a>. Currently, the average hosting cost for every state is lower than the breakeven cost of an <\/span>Antminer S19j Pro<\/span><\/a>.\u00a0\u00a0<\/span><\/p>\n

However, the <\/span>Bitcoin halving event<\/span><\/a> in 2024 poses many questions about Bitcoin’s mining profitability. Miners’ rewards per block will reduce to 3.125 BTC post-halving.\u00a0<\/span><\/p>\n

Inscription Boosting Miners Transaction Fees<\/b><\/h2>\n

Bitcoin Ordinals<\/span><\/a> have contributed to the growth process and price increase of the BTC network positively. <\/span>Dune Analytics<\/span><\/a> reports that inscription transactions gave miners BTC worth $3.73 million in Q1 2023. The total transaction fees paid to miners in Q1 is 1904.32 BTC worth $45.808 million.\u00a0<\/span><\/p>\n

Therefore, inscription accounted for 7.9% of the total transaction volume in Q1, 2023. The inscriptions helped boost the <\/span>floor price<\/span><\/a> of transaction fees, keeping them around 2.30% within this period.\u00a0<\/span><\/p>\n

Bitcoin Ordinals is a protocol system used for numbering <\/span>satoshis<\/span><\/a> giving each a unique serial number. These numbers make each satoshi trackable across transactions. Users can add numbers and other information making these satoshis unique.<\/span><\/p>\n

Read more:\u00a0<\/strong><\/p>\n