BTC prices are down more than 80% from ATH and many question the profitability of BTC mining. Most state that high unit electricity costs make most mining units unprofitable to operate. This article presents a different approach, and explores the following hypothesis: In a bear market, the driving profitability factor for existing Bitcoin miners is not the unit electricity efficiency, but equipment cost.
For most large and sophisticated BTC miners, operating over 1,000 ASIC units, the 2017–2018 market cycle was not the first one. These companies experienced 20x gains in 2013 and saw prices drop by 85% during the 2014 bear market. As such, most developed strategies to maintain operations during rough market conditions. Opex optimization is one of those strategies.
For most miners Opex includes the following key categories: Facility Rent & Maintenance, Employee Salaries, Mining Equipment Electricity Costs, Mining Equipment Maintenance, Liquidation Costs and Banking Fees. To optimize Opex, some of the larger categories miners can invest in are Electricity and Facility:
- Facility - during times with high profitability miners could invest in purchasing existing and expansion facilities or optimize operations in existing facility through increased automation
- Electricity - while…
