Bitcoin Mining May be Less Profitable Than You Think
The Morgan Stanley analysts have accepted the warning, that Bitcoin Mining may no longer be economically viable.
The issue is that “mining” cryptocurrencies such as Bitcoin involves heavy-duty number-crunching and, therefore, requires costly computers and a lot of electricity. That makes it expensive.
In the case of last year, the cost of mining wasn’t so much of an issue when Bitcoin was trading at $10,000 or $15,000. But Bitcoin crashed at the end of 2017 and has never really recovered. Today morning the value of Bitcoin was $8,300 and that’s very good by recent normatives.
Have to mention, that Fundstrat’s model was based on electricity cost globally about 6 cents per hour. Morgan Stanley’s model assumed a very low cost of just 3 cents per kilowatt hour, and still came out being more expensive.
Bitcoin mning’s uncertainty over economic viability isn’t issue for cryptocurrency fans. It’s a great deal for chipmakers, which lowered its guidance thanks to that very reason.
The mining of Bitcoin gets more intensive, as time goes on. That’s because the “mathematical problems” that miners have to solve in order to continue assembling the Bitcoin blockchain are getting more difficult. (While these problems are sometimes described as complex equations that need solving, they’re actually supercharged guessing races.)
“Even if the Bitcoin price stays the same in the second quarter of 2018, we believe mining profits would drop rapidly, according to our simulation,” Morgan Stanley’s analysts said in their note.