How Much does it Cost to Produce a Bitcoin?

How Much does it Cost to Produce a Bitcoin?

By CoinSteps | Crypto - Guides | 21 Apr 2020


As paradoxical as it may seem, because Bitcoin is nothing more than a digital object, its production requires industrial production facilities.  But it wasn't always like that.

In the early days of Bitcoin, a home computer was enough for mining. Then it was realized that the computing power would increase if the graphics card would be conncected. Later someone thought that a special machine doing mining exclusively could improve performance. We have reached the point with constantly improving productivity, where the computing power required has made it a purely industrial activity.

Huge facilities have been set up, with specialized staff competing with each other to be the first to solve a difficult mathematical problem based on a cryptographic fragmentation algorithm. The first to solve a block is rewarder every 10 minutes and receives the Bitcoins of the block as a fee.

The cost of that procedure is determined by two variables. The Investment in mechanical equipment and the cost of electricity. Of course, there are operating costs, but these are usually a small percentage of the total expendictures. Generally, the stronger the processor is, so more expensive or new model, the more calculations it performs, so the more rewards it gains. In terms of energy costs, it depends mainly in which country the industrial production facility is located because the pricing policy of the providers differs in each one, and from the use or not of renewable energy sources, which are usually less expensive.

It is estimated that 65% of mining facilities are in China, which has relatively cheap pricing policy electricity in electricity. You can check here an indicative chart that show the price in may countries. Since the Bitcoin mining depends mainly in electricity you may have access to cheap electricity. In China not only the energy costs are cheaper than most competitors, but they can get cheaper the best computer machines since the largest manufacturers of mechanical equipment are Chinese!

At the site, asicminervalue.com you can calculate what types of machines are advantageous for you depending on the electricity cost, as at the bottom of the page you can set the cost of electricity yourself.

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