How much does it cost to mine 1 BTC a year after the Bitcoin Halving?

Source: Blockworks; Compiled by: Tao Zhu, Jinse Finance

We all know that halving will double the production costs, and the media will portray this fact as a threat to the survival of Bitcoin every four years.

Miners seeking profits must also deal with the fluctuating mining difficulty and energy costs. However, if the price rises, at least they can earn more money for every Bitcoin they mine.

As the price of BTC rises, the high prices attract more miners, resulting in the total hash rate and difficulty of Bitcoin reaching an all-time high.

In fact, although mining income is basically on par with the five-year average, the current mining difficulty is five times that of April 2021, and it is 40% higher than before the last halving.

Therefore, mining Bitcoin is more difficult than ever before. But how much does it cost to mine 1 BTC now? It's always hard to say, and the answer largely depends on electricity and other indirect costs. Cambridge currently estimates the cost price per BTC to be $48,671.

The strong Bitcoin price has brought miners' incomes almost in line with the peaks of the bull markets in 2021 and 2024 (source: Blockworks Research).

Let's take Marathon as an example, this $4 billion mining giant accounts for about 7% of the total Bitcoin hash rate.

According to the documents submitted by Marathon to the U.S. Securities and Exchange Commission, its mining revenue costs were $224.95 million in the three quarters leading up to the most recent halving.

Marathon mined a total of 10,542 BTC during the same period, which means that the production cost for each Bitcoin is estimated to be slightly below $21,500. At that time, the average transaction price of Bitcoin was $39,300, which means the potential profit for each Bitcoin was $17,800.

In the third and fourth quarters of last year, Marathon's estimated production cost using the same method was $43,270—doubling since the halving, consistent with Cambridge's estimates—while the average transaction price was $72,250. This means the potential profit is close to $29,000, even higher than before the halving.

(Marathon CEO Fred Thiel (Fred Thiel) stated in February that Marathon's direct energy cost per bitcoin last year totaled $28,801, although this includes some costs prior to the doubling of production costs. Marathon's profit in the fourth quarter of 2024 exceeded $500 million.)

A year after the halving, according to Marathon's data, Bitcoin block subsidies are still sufficiently generous, at least for the most well-capitalized operations, considering the current price. According to Luxor's Hashrate Index (Hashrate Index), other miners may sometimes incur losses, as the index shows that profitability is at its lowest recorded level. This is understandable given that there have already been five halvings.

In any case, Bitcoin has three years to double its price to offset the next price increase. There is plenty of time.

Satoshi Nakamoto's Prophecy

"I am confident that in 20 years, the trading volume will either be very large or there will be no trading volume at all."

Satoshi Nakamoto said this on Valentine's Day in 2010 – it has been over 15 years since then.

This is an appendix to comments on the necessity of transaction fees in a system where block rewards gradually decrease to zero over time. "Decades later, when the rewards become too small, transaction fees will become the main compensation for nodes."

So, less than five years from the assumptions of Satoshi Nakamoto, how close is he to the truth?

In recent months, the monthly transfer volume has declined, but it is expected to grow significantly by 2023 (Source: Blockworks Research).

Bitcoin processes more than 11.5 million transactions per month, up from less than 8 million at the beginning of 2022, averaging a trading volume of $1.8 trillion in BTC.

On one hand, this could be "very big" as predicted by Satoshi Nakamoto, but over 98% of miners' income still comes from block subsidies.

After a few more halvings, the current dynamics may no longer hold up, so it is expected that the debate about the market structure of Bitcoin fees will intensify over time.