CoinShares: Bitcoin mining in the USA and Germany is becoming unprofitable.

According to the CoinShares report for the fourth quarter of 2024, the sharp rise in the cost of Bitcoin mining was associated with several objective factors, such as the reduction of the rewards for a block to 3.125 BTC, the increase in Bitcoin network difficulty, the rise in electricity prices, and the need to invest in more efficient ASIC devices.

Against this backdrop, the direct costs of mining companies in the USA for producing one Bit increased by 47% over the quarter, reaching a record value of $82,162. Taking into account non-cash expenses, such as accelerated depreciation of equipment, the cost per BTC exceeded $137,000.

In Germany, where electricity is significantly more expensive, the costs for mining companies to extract one Bit have approached $200,000, making the mining of the first cryptocurrency in the country practically an impossible way to generate profits.

As the process of mining bitcoins becomes evidently unprofitable even at the current market price of the crypto asset around $95,000, it forces small miners to rapidly exit the game, making way for large companies with access to cheap energy and the latest equipment.

According to analysts at CoinShares, all of this threatens the decentralization of Bitcoin and could lead to the concentration of mining power in the hands of a few players, reducing the resilience of the network.

According to a study by NBER, cited on Scoop.market.us, 0.1% of bitcoin miners control over 50% of the entire network’s mining power, while the top 10 miners account for nearly 90%. This indicates the displacement of small players by larger ones, including pools.

In addition, high import duties on mining equipment ranging from 24% to 54% are expected to further complicate the situation for miners in the American market in 2025. Especially for those using outdated devices.

Previously, the Kuwaiti Ministry of Interior, the Ministry of Electricity, Water Resources and Renewable Energy, the Communication and Information Technology Authority, and the Kuwaiti Public Authority for Industry made a joint statement about the inadmissibility of allowing the extraction of digital assets on the territory of the country.