Bitcoin mining in China is so lucrative that business would still be profitable following a 50% plunge in the crypto-curency’s prices, according to the latest analysis from Bloomberg New Energy Finance.
A report released by BNEF on Wednesday claims that Chinese miners can turn a profit on Bitcoin mining as long as the crypto-currency trades at over $6,925 – equal to roughly half the prevailing quote of around $13,900.
According to analysts the heavy tariffs imposed by China’s highly regulated electricity sector, which imposes a maximum electricity price of $0.13 per kilowatt hour, is doing little to dent the profits of the country’s Bitcoin mining operations.
“Bitcoin mining under the current price is likely to be profitable under any electricity price regime in China,” wrote Sophie Lu in the report.
Lu further notes that Bitcoin miners could still remain profitable at a price of as little as $3,869, by negotiating for rates as low as $0.03 per kilowatt-hour when there is overcapacity in the network.
According to Bloomberg around 75% of the world’s Bitcoin mining capacity is now situated in China.
Global power consumption for Bitcoin mining purposes rose to around 20.5 terawatt-hours a year by the end of 2017, with Chinese miners accounting for 15.4 terra watt hours.
The Chinese government is currently seeking to discourage domestic Bitcoin mining due to the copious amount of energy that the process consumes.
Recent reports indicate that the Chinese central bank could call for local authorities to launch a crackdown on the practice.
Lu doesn’t not consider regulatory restrictions to pose much of a threat to the Bitcoin mining sector, given the low cost of capital as well as the ease with which business can shift to other locations.
“The overall threat to the sustainability of the global bitcoin network may not be so drastic,” wrote Lu.
