Why 1 Bitcoin costs $1,300 to mine in Iran and $102,260 in United States
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Why 1 Bitcoin costs $1,300 to mine in Iran and $102,260 in United States Photograph: (AFP)
Iran is among the cheapest places to mine a Bitcoin, costing around $1,320 to mine one Bitcoin; on the other hand, in the United States, mining one Bitcoin costs $102,260. But it's far from the most costly place, which is Italy at $306,000.
Mining is a complex process. When a transaction is made between two wallets, the addresses and amounts are entered in a blockchain, and the block is assigned a hexadecimal cryptographic number, also known as a hash. Mining is the process of securing that cryptographic number by solving complex numerical problems.
The hash or the cryptographic number is a sixteen-digit number, for example, 7f83b1657ff1fc53b92dc18148a1d65dfc2d4b1fa3d677284addd200126d9069. The puzzle involves finding a number or nonce (a number only used once) that, when combined with the block data, produces a hash below the aforementioned number. This process requires massive computational power. The winner receives a block reward (newly minted Bitcoin+transaction fees). For these purposes, special machines called AISCs are used. They are thousands of times faster than an ordinary computer, which requires massive energy.
In countries like Iran, Ethiopia ($1,990), Sudan ($3,970), Cuba ($3,970), and Libya ($5,290), the energy costs are comparatively cheaper due to subsidised electricity and an underdeveloped energy market. In Iran, the cost of electricity is 0.004 USD/kWh compared to 17.47 cents/kWh in the USA, which is almost 44 times higher.
The first world countries like Europe, the USA and Australia are not profitable. For example, Italy is the most expensive at $306,550 per coin; similarly, Austria ($277,000), the Bahamas ($280,000), and Switzerland ($236,000) also fall into the unprofitable zone. In the United States also the average cost for mining one BTC is roughly $102,260. This cost is calculated based on the average household electricity price multiplied by the amount of energy consumed.
So, for miners, it is usual to flock to a low-cost electricity zone. This also shows the vulnerability of Bitcoin as it can be a major financial tool, Europe specifically is out of the competition due to their inability to subsidise electricity and keep charging in a range which is way costlier than developing countries.
