How Does a Miner’s Break-Even Electricity Cost Change Immediately after a Halving?
Immediately after a halving, a miner's break-even electricity cost per coin mined effectively doubles, assuming all other factors remain constant. Since the block reward is cut by 50%, the miner must spend the same amount of electricity to receive half the reward.
To maintain the same profit margin, the miner must either reduce their power consumption, acquire more efficient hardware, or rely on a proportional increase in the coin's market price.
Glossar
Electricity
Volatility ⎊ Electricity, within cryptocurrency and derivatives markets, represents the degree of price fluctuation for an underlying asset or contract, directly impacting option pricing models and risk assessments.
Break-Even Electricity Cost
Metric ⎊ Break-Even Electricity Cost represents the maximum energy price per kilowatt-hour a cryptocurrency mining operation can sustain before incurring a net loss on its mining activities.
Electricity Cost per Coin
Calculation ⎊ Electricity Cost per Coin is a tangible metric representing the total energy expenditure, typically measured in fiat currency, consumed to successfully mine one unit of a Proof-of-Work cryptocurrency.
All-In Operational Cost
Cost ⎊ The aggregate of all expenditures required to sustain the computational and administrative functions necessary for cryptocurrency operations, extending beyond direct hardware acquisition.
Difficulty Adjustment Period
Algorithm ⎊ Difficulty Adjustment Periods represent a core mechanism within proof-of-work cryptocurrency networks, dynamically recalibrating mining difficulty to maintain consistent block generation times despite fluctuating computational power.