JPMorgan Says Crypto Mining is “Unprofitable”

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JPMorgan is an undeniable global powerhouse, so a report coming from the financial services giant carries a lot of weight. In its latest report, JPMorgan claims that mining Bitcoin is unprofitable and that crypto miners are hemorrhaging money in order to stay active. Interestingly, most crypto mining firms that are still operating are actually turning a decent profit – especially following the collapse of Bitmain. So, why is JPMorgan coming out and saying the opposite?

JPMorgan is Correct… to a Certain Extent

The report from JPMorgan doesn’t go into specifics – such as exact cost of power used and efficiency of mining rigs – but to a certain degree the report is correct. If you’re using just any old power and mining rigs that are a generation or two old then there is a good chance you’re running at a loss. JPMorgan estimates the average cost to mine one Bitcoin stands at $4,006, and considering the current price of $3,500 per Bitcoin miners are allegedly looking at steep losses.
JPMorgan’s report holds true for many firms that are set up incorrectly and hurriedly, with mining firms shutting operations on a daily basis. Just a couple of weeks ago, DMM Crypto Mining decided it was time to cut its losses and shut up shop. This once again adds validity to JPMorgan’s report. However, not all mining farms are built equally – meaning the average cost is exactly that, an average.

Miners Still Tuning a Profit

Around the globe, there are numerous countries where it’s still incredibly profitable to mine Bitcoin and other cryptos. While most of these are third world countries with low power costs, there are a few in the developed world. Iceland remains one of the most popular places to mine cryptos thanks to its wealth of geothermal power, making electricity more than twice as cheap as mainland Europe. Other mining giants in Canada are mining Bitcoin at a cost of around $2,300 – meaning even with Bitcoin’s current low prices they are still turning a huge profit.

It’s All About the Power

In order to mine cryptos efficiently and cost-effectively, you need access to low-cost power. Fortunately, for large swathes of the world, pioneers in the 50s and 60s built huge hydroelectric dams, meaning many places across North America have a huge surplus of green, renewable energy. This power cost a fraction of a cent per kilowatt an hour, meaning miners are turning to this low-cost source of power. In fact, a recent report showed that more than 77% of all energy used in the crypto mining process comes from renewable sources – meaning that there are hundreds of miners out there that can afford to keep running, even with Bitcoin in the grips of a price drop.

Keeping Miners Cool

Another trick to keeping mining low-cost is to extract the heat produced as efficiently as possible. In order to do this in warmer climates, many miners are turning to 3M Novec. These mining farms submerge the mining equipment in this 3M Novec, which keeps the devices running at an optimal temperature. When the Novec reaches its boiling point, the vapors are collected, channeled into huge cooling towers where it’s condensed and pumped back into the system.
One other group of miners have come up with an even better solution to the waste heat, something that might make your skin crawl. Grevio will use the waste heat from its crypto mining to heat its farm, so that crickets can live in an optimal temperature to thrive and grow. Once mature, the crickets will be sold off at markets, giving this crypto mining operation two ways to turn a profit – not a bad use for waste heat really.
While JPMorgan is right to a certain extent, it’s report clearly focuses on just a handful of locations and setups. With the right mining rigs, the right power source, and the right cooling, crypto mining can be profitable even if Bitcoin dips below $3,000. There are thousands of miners with the perfect setup out there mining profitably, clearly JPMorgan has an axe to grind with the crypto world.