10 Jan Not All Doom and Gloom for Chinese Bitcoin Miners
Chinese Bitcoin miners could withstand a massive Bitcoin price correction due to the margin being made from cheap power costs.
Even amid future regulatory constraints, Chinese Bitcoin miners could withstand a massive market crash due to the low electricity costs in the country.
According to Bloomberg, China’s thriving Bitcoin mining industry would still be highly profitable if Bitcoin price were to drop to $7,000.
Bitcoin price shot up from $1,000 in January 2017 to a record high of $20,000 in December, which of course demanded more miners and inevitably more energy.
China has long been a cash-cow for Bitcoin miners, due to a surplus supply of energy leading to low power cost.
Bloomberg New Energy Finance (BNEF) analysts published a report on Jan. 10 stating that mining operators in China could still turn a profit if Bitcoin price is anywhere above $6,925.
According to analyst Sophie Lu, mining will almost always be profitable in China:
“Bitcoin mining under the current price is likely to be profitable under any electricity price regime in China.”
Following a closed-door meeting in December, there is talk of mining operators facing power restrictions in certain regions of China, where there is higher electricity usage. But this latest analysis suggests that it’s not all doom and gloom for China’s biggest mining operators, including the likes of Bitmain, BTCC, BW mining and BTC.com.
A drop in the ocean
While power surveys have cited the massive power demand of the global Bitcoin mining industry, China’s operators are by far the biggest.
However, BNEF’s statistics highlight the true scale of the country’s mining industry in comparison to the overall electricity supply. China’s miners use 15.4 terawatt hours of power, which amounts to 0.2 percent of the country’s annual electricity production.
The highest electricity rate for Chinese miners is $0.13 per kilowatt-hour. However, as Lu reports, operators can negotiate prices down to as low as $0.03 – meaning miners would be profitable as long as the Bitcoin price stays above $3,869.