Since this June when the Chinese government started to crack down on crypto mining, the global hashrate center has moved elsewhere as the majority of miners have looked for new mining farms. During this process, priority should be given to mining costs, which vary among countries with different electricity costs.
The recent data can provide us with a simple estimate of the electricity costs for mining across the globe. According to ViaBTC, the hashrates of the entire network reached 115342853.44 TH/s on August 14, 2021, and the miners’ revenue on August 13 alone was about 911.07973618 BTC. Take Antminer S19, the most popular mining machine. As official data suggest, Antminer S19 has a rated hashrate of 95TH/s and power consumption of 3250w.
From the above, we can reach conclusions as below:
The average daily income of a single mining machine is approximately: 95 / 115342853.44 * 911.07973618 ≈ 0.000723 BTC
Assuming the electricity price in a country is P, the electricity costs for a single mining machine per day is approximately: P * 3.25 * 24 = 78 P
Therefore, the electricity cost required to mine a bitcoin is: 78 P * 1 / 0.000723 ≈ 107884 P.
Then combined with the statistics of commercial electricity consumption on Global Petrol Prices in December 2020, the electricity costs of mining a bitcoin in countries around the world are as shown in the figure below:
The statistics of Global Petrol Prices are the average costs of electricity for commercial use in various countries. According to the market survey of ViaBTC, there is still some gap between the electricity cost for mining and electricity costs for commercial use in various regions. The electricity cost is around $0.054 in the Russian-speaking region, around $0.1 in Northern Europe, around $0.031 in South America, and US$0.077 in China. From the statistics, the approximate electricity costs for mining in the four major areas of cryptocurrency mining are shown in the following figure:
According to the picture, we can see that South America has the lowest electricity price, but since there are fewer mining farms that can provide hosting, the majority of miners there mine cryptos independently. In other areas, due to the scarcity of power resources nowadays, miners also need to allocate a portion of the mining revenue to the mining farms in addition to electricity costs. The current market survey of ViaBTC reveals that part accounts for approximately 10%-30% of the revenue, and the specific figure varies with local conditions.
In addition to electricity costs and operation and maintenance costs of mining farms, mining costs also involve the purchase of mining machines. Though this cost is fixed, China enjoys certain advantages as it is home to most mining machine manufacturers. In other countries, factors such as logistics and tariffs have pushed up the purchase cost. That explains the difference in the price tag of mining machines across countries.
Before relocating mining machines, miners need to comprehensively consider factors such as local policies, cultural customs, the local climate, the qualification of a mining farm and its partners, in addition to costs alone. The United States and Canada, for example, have a relatively stable political environment and fully-fledged mining farms but high costs of operation, maintenance and electricity; contrast them with the Russian-speaking region, where miners need to face political uncertainties but can enjoy much lower electricity costs thanks to the abundant power supply.
On the whole, miners need to learn to find a stable and reliable mining farm, and such a decision should be made on the comprehensive data analysis and on-site inspection. When entrusting a local mining farm to host their mining machines, miners are suggested to start from a small size to see the mining farm’s stability and the local mining procedures and increase investments after operation stabilizes. Large miners who need to independently or jointly build a mining farm in areas such as South America should be more careful about the political risks and local culture and customs before investment and construction to avoid losses.