Price of bitcoin falls below cost to mine


To add further misery to bitcoin enthusiasts, the act of finding or “mining” the cryptocurrency has become unprofitable as the price continues to crater.

This raises further questions about the viability of the accounting system supporting the cryptocurrency.

The volatile asset is now fetching under $3,200, off more than 84 percent from the highs seen during its “tulip mania” phase of a year ago.

At that point, in late 2017, accelerating numbers of people were spending real dollars on computers and electricity to create (or uncover the “coins,” using advanced algorithms.

As they engaged in the then-lucrative business of mining for bitcoin, these entrepreneurs were conducting the “blockchain“ transactions which in fact tell you how much is in your “wallet“ and allow trading to happen.

Without mining, this system, which has no Federal Reserve or other financial institution backing it up, would cease to function.

Bitcoin miner revenues hit $4.7 billion through the end of September, up $1.4 billion over the first three quarters of 2017, reports Diar, a cryptocurrency bulletin.

At the same time, miners have been spending more and more money on sophisticated computer rigs and the electricity they devour.

As of January 2018, a month in which bitcoin opened at over $13,000, miners paying retail electric rates took home an 86 percent profit on just over $1 billion; by September, the coins were trading in the $6,000 neighborhood, mining revenues had fallen in half, and profit margins became nonexistent were close to nil.

“The investment proposition for smaller miners held true throughout most of this year but has since become questionable on the back of an increase of computing power competing for the coinbase reward,“ the Diar report states.

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