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The Price at Which Bitcoin No Longer Makes Sense to Mine

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Sara Silverstein: With oil drillers, it only makes sense to drill oil if oil is at a certain price. Is there price at which Bitcoin no longer makes sense to mine?

Wes Cummins: So Bitcoin is funny. It's kind of very different, it's a little bit like oil, but, you know, oil has its own self-adjusting mechanisms. So if you take supply offline, then the price is eventually correct, right? And then the most efficient operators can generally always make money. And so Bitcoin is similar. So you have what's called network difficulty, which is the total hash rate of the network. And so the total hash rate of the network I think is around 240 eggs of hash right now. And so generally as prices go down, the least efficient operators will come offline. And so as they come offline, then the difficulty goes down and your equipment earns more. And so your break-even goes lower. But but where it stands right now, the variable break is kind of in the $9,000 to $10,000 per Bitcoin range right now on the variable of like running the data centers for our customers. So it's still a somewhat profitable, but it's not at a level where someone would go out and buy new hardware by any means, and so it's kind of in that equilibrium, but it usually is self-correcting. So if Bitcoin continues to go down, the most inefficient operators are going to go offline, the more efficient operators make more tokens from their hardware, so it’s a little bit self-correcting. But that’s kind of the levels. $10,000-ish right now, depending on your hardware or you electricity costs, is the variable break-even, and $20,000 is the break-even to buy new hardware, or even a little bit above that.

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