What Is the Relationship between Mining Profitability and Electricity Costs?
Mining profitability is directly and heavily influenced by electricity costs, as the Proof-of-Work process is extremely energy-intensive. Miners calculate their break-even point based on the block reward, transaction fees, and the cost per kilowatt-hour (kWh) of electricity.
Regions with cheap, sustainable power sources are typically the most profitable for large-scale mining operations. High electricity costs can render mining unprofitable, especially for older, less efficient hardware.
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.
Mining Profitability
Definition ⎊ Mining profitability refers to the net financial gain or loss derived from operating cryptocurrency mining equipment over a specific period.
Electricity Costs
Constraint ⎊ Electricity Costs represent a significant, often dominant, variable operating expense for proof-of-work mining operations that underpin the security of major cryptocurrencies.