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The relationship between the energy costs of the Bitcoin mining and the Bitcoin price

Does the cost of energy required for Bitcoin mining affect Bitcoin price? Recent reports have drawn attention to the enormous amounts of energy needed for Bitcoin mining. According to the Digiconomist website, the energy consumed in the Bitcoin ranks 64th in the world in terms of energy consumption. Annual consumption of power for Bitcoin mining is estimated at 30 TWh.

he energy costs of the Bitcoin mining

Energy accounts for between 90% and 95% of the costs of Bitcoin mining and plays a very crucial role in determining the earnings of workers on encrypted currency mining. In turn, the achievement of profits is important to attract more minerals and the development of the ecosystem of the mining of Betcuen. The question remains:

Does the cost of energy required for the Bitcoin mining affect its price?

The use of energy for the Bitcoin mining depends on several factors, from the availability of cheap and abundant energy to energy saving devices to the difficulty of solving problems by machines to win the rewards of Bitcoin. Thus, the difficult problem is a heavy calculation (versus an easy problem), so you will need additional energy resources to solve it.

An article has pointed out Forbes said last year that the fees for the Bitcoin (or the difference in the cost and total value of the Bitcoin) will become nothing, as long as the mining process consumes a lot of energy.

Over the years, those who monetize Bitcoin have reduced energy costs by shifting production to China. A country reported to account for 60% of the country’s production. Most of China’s Bitcoin are located in Sichuan Province, where hydroelectric power dominates.

Iceland is a prominent place for Bitcoin mining operations. Chinese miners did not provide estimates of the costs of the Bitcoin production. However, Genesis mining, who moved its own mining facilities from China to Iceland, estimated that one Bitcoin production cost the company $ 60.

In an article in 2015, Adam Hayes estimated a pricing model for Bitcoin (where energy was the main cost) and concluded that technological advances, faster and more efficient in terms of energy-efficient appliances, would lower Bitcoin price in market.

With increased mining efficiency in the real world. Which could result from competition, the profit margins of the producers of Petcown will decrease. “Bitcoin producers will compete at low cost by offering their products at lower and lower prices,” Hayes said.

The increase in the number of bitcoins is equivalent to a jump in their price

There has been a marked improvement in the processing capacity and cost of equipment.
With lower energy costs, the difficulty levels of mining in Petchemin have generally increased. With the exception of two cases, difficulty levels have consistently increased over the past year. This increases the rate of fragmentation of encrypted currencies and is necessary to ensure the security of your home. Although this costs more energy, the difficulty of the problems translates into a safer home network.

The reduction of the rewards received by the metal against Bitcoin mining from 25 to 12.5 has allowed the metal workers to work harder to win the same number of Bitcoin as before. Then there is speculation, which played a prominent role in raising the prices of the cryptocurrency. Modern cryptocurrency streams have led to the emergence of new algorithms that require less processing power. For example, the modern Bitcoin Cash adjusts the difficulty of the problem depending on the retail rate, thus enabling to reduce power consumption.

The net effect is that energy costs continue to account for the largest component of the costs of Bitcoin Mining, but they have only a small impact on their price. The energy costs associated with the mining operations confirm that there is still a major obstacle to entering the industry.

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