Actually Bitcoin needs to drop 94% for mining to be unprofitable. The break even is 1 BTC = $922. Yes, mining is insanely profitable right now. Miners are swimming in cash.
This is assuming $0.05 per kWh (which is a rate available to many miners outside of China, eg. Gigawatt Mining in Washington State pays $0.028 per kWh,) and a miner efficiency of 0.1 joule per gigahash (such as the popular Bitmain Antminer S9). The break even point is calculated with:
j_over_gh × cost_per_kwh / 3.6e6 (joules per kWh) / reward × (2^32 × diff) / 1e9
The parameter are: j_over_gh = 0.1, cost_per_kwh = 0.05, reward = 12.5 BTC per block, diff = 1931136454487.72. (This ignores transaction fees which have pushed the average block reward from 12.5 to around 17 BTC over the last few weeks, so the true break even point is even lower, around 1 BTC = $680).
I am occasionally interviewed by journalists who write about Bitcoin mining and they often get many details wrong. This one is no exception—Dan Murtaugh should have contacted me :)
This is assuming $0.05 per kWh (which is a rate available to many miners outside of China, eg. Gigawatt Mining in Washington State pays $0.028 per kWh,) and a miner efficiency of 0.1 joule per gigahash (such as the popular Bitmain Antminer S9). The break even point is calculated with:
j_over_gh × cost_per_kwh / 3.6e6 (joules per kWh) / reward × (2^32 × diff) / 1e9
The parameter are: j_over_gh = 0.1, cost_per_kwh = 0.05, reward = 12.5 BTC per block, diff = 1931136454487.72. (This ignores transaction fees which have pushed the average block reward from 12.5 to around 17 BTC over the last few weeks, so the true break even point is even lower, around 1 BTC = $680).
I am occasionally interviewed by journalists who write about Bitcoin mining and they often get many details wrong. This one is no exception—Dan Murtaugh should have contacted me :)