Despite China’s recent plans to limit power use by some bitcoin miners, the practice is so profitable in the country that even if the cryptocurrency’s price dropped by half, miners would still make money.
Sophie Lu, an analyst for Bloomberg New Energy Finance, says the miners will keep on profiting as long as bitcoin’s price remains higher than $6,925. While it recently suffered a price drop following South Korea’s plans to further tighten regulations surrounding crypto trading (and perhaps even ban it), bitcoin is currently worth $13,738.
The 1400 percent rise in bitcoin’s price last year has seen a greater demand for electricity to run mining computers in the country.
Mining bitcoins can use a lot of electricity, but the low costs in China— from $0.03 to $0.13 per kilowatt hour—make it profitable even if the price drastically drops. The overcapacity of the power-generating sector has enabled the lowest rates, which could allow miners to break even at a bitcoin value of $3689.
Electricity needed for bitcoin mining rose to around 20.5 terawatt-hours a year by the end of 2017. That’s more than half of the 38 terawatt-hours of power used each year by the world’s biggest traditional mining company, BHP Billiton.
Despite China being home to the world’s largest community of bitcoin miners, they only use 0.2 percent of the country’s annual electricity production, or 15.4 terawatt hours, according to the report.
Earlier this month, the People’s Bank of China (PBOC) asked local authorities to regulate bitcoin miners’ power usage to slowly reduce the scale of their production. If this happens, it’s likely that the miners will just move to new regions.