Mining cost of 1 BTC in the U.S. to rise more than $5000 in 2023.
Rising electricity prices in states across the U.S. have impacted the cost of bitcoin mining: between January 2022 and January 2023, commercial electricity prices in U.S. states rose an average of 10.71%, outpacing the 6.4% increase in the Consumer Price Index.
Bitcoin prices dropped from $48,000 to less than $15,000 in 2022, and increased operating costs and lower returns led to increased losses for miners, but things are changing as the bitcoin price recovered to $30,000 in the first quarter of this year and miners' hash prices rose 31%.The Hash Rate Index noted that "amidst the gloomy early New Year, the lowest hash price in U.S. dollar terms in the first quarter was on January 1," adding thatWith a 70 percent increase, the price of bitcoin revived throughout the quarter, and hash prices rose along with it."
Which states have the lowest mining costs?
The cheapest and most profitable state in the U.S. to mine bitcoin was New Mexico, with a cost of $16,850 per BTC, while the most expensive state was Hawaii, at about $114,590.Southern and Midwestern U.S. states appear to be the most attractive to miners in terms of electricity rates. Recently, several U.S. states, including Arkansas, Montana, Missouri, and Mississippi, have taken specific steps to protect virtual currency miners from excessive taxes and regulations, while Texas has amended its utility and tax codes to tighten restrictions on virtual currency mining companies.
Energy Deflation Boosts Miners' Profits
Researchers predict that the profit margin for bitcoin mining will further expand based on the U.S. Energy Information Administration's (EIA) energy price deflation forecast.The EIA, for example, expects electricity demand to decline by 1% in the second quarter due to additional generation from renewable energy sources and cheap natural gas prices; it further expects natural gas prices to fall below $3 in 2023, from an average of $6.45 in 2022.
Mining companies' stock prices in the limelight
Lower operating costs could help cash-strapped bitcoin mining companies survive into 2023; for example, the stock price of Core Scientific, an already bankrupt bitcoin mining company, is up more than 450% since the beginning of this year.Similarly, the HI Crypto Mining Stock Index is up more than 100% this year, indicating a return of investor interest in mining stocks.
