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Will price surpass this soon? – TradingView News
Data suggests that the average Bitcoin mining cost is around $86,700 at the moment. Here’s what history suggests could happen next for BTC.
Bitcoin’s average mining cost is currently notably higher than the price
In a new post on X, analyst Ali Martinez talked about what the average cost of mining BTC is like right now. The Bitcoin network works on a consensus mechanism based on “proof of work”, in which validators called miners compete with each other using computing power to obtain the hash of the next block in the chain.
This computing power naturally has its operating cost, with electricity being the most notable expense that miners have to pay, as it is a perpetual cost. The incentive to spend capital on mining operations lies in the block rewards these validators receive upon successfully adding the next block.
Obviously, mining expenses are different depending on location, as electricity prices are not the same everywhere. As such, the chart Ali cited from MacroMicro uses data provided by the University of Cambridge on BTC electricity consumption to figure out an average value.
Below is the chart in question, which shows how the average cost of mining on the Bitcoin network has changed over the last few years.
NewsBTC
As visible in the chart above, the average Bitcoin mining cost (colored in blue) was below the cryptocurrency’s price at the beginning of the year, but recently the value of the former has skyrocketed and surpassed that of the latter.
The reason behind this sudden increase is that there is another variable at play in calculating the average cost of Bitcoin mining: issuance, or the number of tokens miners mint daily.
In general, block rewards remain fixed in both value and frequency, so network emission, which is nothing more than the sum of block rewards mined in a day, also remains more or less fixed.
Specific events, however, do not comply with this. They are the halves. These periodic events that occur approximately every four years permanently reduce block rewards by half.
The last such event, the fourth in the history of cryptocurrency, took place in April. Naturally, halvings mean that the cost of mining 1 BTC increases drastically, as miners only receive half the rewards as before after doing the same amount of work.
Thus, it is not surprising that the coin’s production cost has seen a sharp increase coinciding with the latest halving. Currently, this metric is $86,700, which means that according to MacroMicro’s model, the average miner would be underwater.
Based on the indicator’s previous trend, Ali identified a pattern that Bitcoin has always followed. “Historically, BTC always exceeds its average mining cost!” observes the analyst.
As such, if this pattern continues to hold in the current cycle as well, then it may only be a matter of time before Bitcoin breaks the $86,700 mark.
BTC Price
Bitcoin experienced a drop of more than 5% recently, which brought its price below the $66,000 level.