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Morgan Stanley: only at $8,600 can bitcoin miners profit

A team of researchers at Morgan Stanley led by Charlie Chan have conducted a research on bitcoin mining and their discovery is astonishing. The researchers indicate that only at $8,600 can bitcoin miners profit and this is after assuming a very low electricity cost of (US$0.03 kW/h).

The analysts believe if the price of the top crypto coin won’t recover to $8,600 then miners will soon discover the sad truth that it’s unprofitable to keep creating the crypto coin. Bitcoin is currently trading at $8,276 which shows if the analysts are correct with their predictions then BTC has some way to go before crossing the profitability line for miners.

Charlie Chan is quoted saying:

“We estimate the break-even point for big mining pools should be US$8,600, even if we assume a very low electricity cost (US$0.03 kW/h),”

After the report was released yesterday, Taiwan Semiconductor Manufacturing or TSMC was forced to lower its 2018 revenue prediction from a 10 to 15 percent growth to 10 percent. The Morgan Stanley analysts estimate that about 10% of TSMC revenue is now dependent on the demand for mining cryptocurrencies.

To understand bitcoin mining you have to go back to its roots. Satoshi Nakatomo designed only 21,000,000 BTC to ever exist. Initially, mining was easy and 50 BTC were rewarded for every block added. As more bitcoins were mined, this reward amount was set to half after a certain number of years. So what started as a reward of 50 BTC reduced to 25 BTC and now 12.5 BTC per block.

Also as more Bitcoins are mined the higher the difficulty level. Mining requires high electricity consumption and computers with high processing power. The first miner on the bitcoin network was Satoshi who reportedly mined the first 1,000,000 BTC in the initial weeks of the project using only CPUs.

From CPUs came GPUs (graphics processing unit) which were more powerful and then ASIC which has remained the standard bearer of BTC mining hardware. In April 2010 Laszlo Hanecz, the guy who bought two pizzas for 10,000 bitcoins, was the first to experiment with GPU card in his computer according to Nathaniel Popper’s popular book Digital gold. He won 1 of 2 blocks every hour at a time when the reward was 50 BTC per block.

Hopefully, Bitcoin will recover past $8,600 and then miners can get a return on their investment.

Do you agree with the Morgan Stanley analyst that only at $8,600 can bitcoin miners profit? Let us know in the comment section below.


Basil is a Bitcoin and blockchain evangelist with several years of writing in the tech and finance industries. Having several years of freelance experience with leading cryptocurrency and tech related sites in past, he believes strongly in the revolutionary power of the blockchain technology. You can get in touch with Basil via twitter @basil_kimathi

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