r/BitcoinMining • u/Altairandrew • 2d ago
General Discussion When prices fall
Do people stop mining when BTC prices fall below some level. I know there are some who wouldn’t. But at some point cheaper to buy btc than mine it.
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u/Discokruse 2d ago
The formula you are looking for is:
(($ per PH per day/1000) * 41.666) / ($0.xx/kWh cost)
This gives you the J/TH break even point of efficiency.
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u/Altairandrew 2d ago
I get the break even, but do miners actually stop mining. Certainly not the small miners like me. Though i would cut back to only the cheapest time of day.
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u/Discokruse 2d ago
The big miners are not stopping. They want to spend the money on electricity....it's all near term write-downs on income. You literally are writing off the purchase price of the bitcoin. You get regular income, maybe less that expense, but they don't want regular income anyways...it is all about the long term capital gains. Zoom out a few years and play the long game.
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u/Altairandrew 2d ago
And write off investment in equipment. At some point you are better off just spending the money you’d spend on electric and purchase btc. They will have the write off either way. Just not in electricity if they are t using it. But a loss is a loss.
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u/Discokruse 2d ago
Yes, miners will stop mining, depending on their equipment. In Texas, there are sometimes 5 different rates for electricity throughout the day. Some miners there will only turn up their fleet during the off-peak rates and curtail during the daytime. There are api management programs that are tied directly to electric markets and can scale down mining rigs remotely to step aside when the dynamic rates are too high....then back on when the rates are low again. It's all about balancing the grid and bitcoin is the buyer of last resort.
The power companies would like to have high usage on the equipment, so it makes revenue, but not wildly fluctuating into the danger zone. Bitcoin miners can make that happen with their dynmaic load abilities. There are mining organizations in Texas that are 20MW large...like 6000 rigs operating in tandem.
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u/solenico 2d ago edited 1d ago
At least where I live the costs are reduced from the mining income and the net income is taxable. If I spend money from another income income I pay income tax for that. In that sense I don’t care if the mining is occasionally unprofitable.
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u/Discokruse 1d ago
If you spend $100 in electricity to mine $80 of bitcoin, you have a $20 loss in that tax year. If you sell that bitcoin over a year later for $200, you pay 15% on $120 of long term capital gains.
Don't stop mining, even if you are unprofitable. Stack sats and let them cure for 366+ days.
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u/solenico 1d ago
I might have $40 loss at one month and $40 dollar profit another. This means I’m not paying tax when I combine loss and profit since net sum is $0. It’s still better than buying since I pay income tax.
Another thing to add is that during winter the miner practically heats my house so even with constant loss it’s actually profitable all tax indications plus heating counted as whole even with relatively high electricity price.
My system goes down when electricity goes above 40c/kWh or so. This happens rarely but it happens time to time. Twice this year. The average I paid for electricity this year is under 10c/kWh and minimum around 4c/kWh. I have SPOT price so the price does fluctuate a lot. Typically at summer electricity is very cheap but at winter it can go really high. Which is why I have coded the automatic shutdown and startup based on price.
The other thing is I get rewards without any transfer or conversion fees. That’s not the case when I buy BTC – well, transfer actually is free with Strike using flexible.
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u/Discokruse 1d ago
Probably should get the api info for when electricity is under 10c/kWh and have the miners turn themselves off when power cost is high. That way, you'll likely only mine at night when you need the heat anyways.
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u/solenico 1d ago
It’s way colder here than you think. Finland. The heating by miner is not even enough during winter. I have calculated the break even point with the heating included.
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u/Discokruse 1d ago
Sounds like you need more miners to subsidize heating requirements. Especially if electric rates drop at nighttime. How fortunate for you.
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u/Ill_Cause_7364 1d ago
Not necessarily. There are many benefits to doing it through a business to have those deductions. There also benefits to how businesses handle those taxes and how they pay out their income and how that income gets taxed. You are also mining as you pay for electricity. If you only buy, you are forced to buy/sell at certain prices. Mining ensures you have steady revenue.
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u/Altairandrew 2d ago
By the way what’s the 41.66 equal? I would think it’s simply figuring out your electricity cost, and then how much you can mine vs. that. So you would have electricity cost per kWh or potentially figuring out cost on a time of day plan, the amount you earn per kWh and figure out the breakeven and if btc is above than mine, below don’t mine.
But do people actually do this.
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u/Discokruse 2d ago edited 2d ago
The number of joules in a killowatt-day divided by the number of seconds in a day.
It's explained on wattsitworth
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u/superminingbros 2d ago
Smart mining pools probably shift some hashrate, but it may or may not be notable. It’s all about the price per TH/s
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