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Creating bitcoins is now much cheaper

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Creating bitcoins is now much cheaper

Skyrocketing energy bills and a collapse in the value of cryptocurrencies make mining less and less convenient. For companies and users operating in this sector, revenues are in sharp decline, according to data provided by a study by Arcane Research.

Since the beginning of the year, the value of a bitcoin (BTC) has fallen by 50 percent (priced at the state in a range between 19 thousand-20 thousand dollars) and that of Ethereum has also decreased significantly, while the entire cryptocurrency market is now worth less. of 1 trillion dollars.

The hash price – a single trader’s daily revenue per hash rate (hashrate), a measure of the computational speed needed to mine cryptocurrency – has fallen to a low of $ 0.077, the lowest level since mid-2020.

Debts and bankruptcies

Profit margins decrease and those who participate in the mining activity (miners) begin to have serious problems in being able to pay high bills, such as the Compass Mining company, or having to drain their digital wallets with less and less cryptocurrency. To cope with debts, Bitfarm, for example, was forced to sell half of the bitcoins in its possession in June.

On the other hand, the rising costs put a strain on the management of many operators who are unable to withstand the difficulties, declaring bankruptcy. This is the case of Compute North, one of the largest hosting providers for the cryptocurrency industry, which in September, overwhelmed by losses, filed for bankruptcy in Texas.

The prohibitive energy prices also push users and companies to migrate to areas and countries, such as Norway and Sweden, where it is possible to have cheaper energy resources.

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On the international level, however, according to the research carried out by 911 Metallurgist, Kuwait is currently the state where the cost of mining is lowest, followed by Algeria, Sudan, Yemen and Ethiopia. Moving from place to place, however, is not that simple. Also due to the bans imposed by several countries, including China and Algeria.

Resilient but unsustainable mining

In any case, high costs, a state ban and a sharp decline in value do not discourage mining operations. Bitcoin’s hashrate continues to rise and, according to estimates by Braiins Insights, hit an all-time high in October. This means that more computing power is dedicated to mining and, consequently, the consumption of electricity that the cryptocurrency network is pumping at full speed increases.

In a report released in June, the Swedish central bank called for a ban on the mining of bitcoins due to the waste of energy caused by this activity. More recently, a research by the University of New Mexico, published in the scientific journal Scientific Reports, highlighted its unsustainability from an environmental point of view.

Bitcoin mining, the researchers argue, is energy-intensive which, moreover, comes mainly from fossil sources such as coal and gas. Thus contributing significantly to increasing carbon dioxide emissions into the atmosphere. More than “digital gold” we should talk about “digital oil”, given that the impact on the environment of bitcoin and cryptocurrencies, even if efforts are made to introduce more efficient and ecological software and technologies, is comparable to that of the productive sectors more energy-consuming and polluting.

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