A model rekindles the debate on the real cost of producing a Bitcoin

The rise of bitcoin does not resolve the economic equation of mining. At Riot Platforms, the price increase covers the electricity bill, without absorbing all the charges or the depreciation. This discrepancy brings the debate back to a more demanding question: at what price does a mining company really become profitable again? The analysis distinguishes three thresholds, from energy cost to accounting result.

Three profitability thresholds, the same observation

The cost of mining a bitcoin can no longer be summed up in a single number. We must distinguish several layers of profitability, depending on whether we look only at electricity, operating expenses or accounting income. Applied to Riot Platforms, this reasoning leads to a more nuanced reading of the bitcoin rebound: at the price of $67,200, the group covers a first level, but remains underwater on the following ones.

The mining company model is detailed based on current network conditions and data from Riot publications. Thus, we assume a Bitcoin difficulty of 145,042,165,424,850, a block reward of 3.125 BTC, a modern ASIC efficiency of around 17 to 19 J/TH and an industrial electricity price in Texas close to $0.0667 per kWh. Transaction fees are not included, but they fluctuate around 0.02 BTC per block.

• At the current price, Riot “crosses a first break-even threshold, but fails to reach the next two”. This formula summarizes the entire demonstration: the company passes the electrical threshold, without reaching the operational threshold or the accounting threshold;

• The electric break-even point stands at $64,635 per BTC. At $67,200, this leaves an energy margin of $2,565 per bitcoin mined;

• When adding operational costs excluding electricity, estimated at $9,809 per BTC from Riot documents, the operating margin drops to -$7,243;

• With the depreciation layer, estimated at $39,687 per BTC, the accounting result drops to -$46,930: “the cost of producing a bitcoin is not just a single number”;

• The model also displays its intermediate metrics: 622.95 sextillion hashes per block, 199.34 sextillion hashes per BTC and 969.04 MWh of energy per bitcoin produced.

Price scenarios provide another reading of the sector

The second part of the analysis tests the sensitivity of the model to several price levels. In the bearish scenario at $49,000, Riot remains negative across the board, with an energy margin of -$15,635, an operating margin of -$25,443, and an accounting profit of -$65,130 per BTC.

In the $80,000 recovery scenario, the group crosses the operational threshold with $5,557 margin per BTC, while the accounting line remains negative at -$34,130. So, “mining companies can show positive profitability on the electrical substation alone, while publishing degraded operating or accounting results”.

By assuming an increase in Riot's hashrate from 38.5 EH/s to 45 EH/s by March 31, 2026, then a stabilization at this level, analysts estimate a cumulative production of 15,000 BTC over all scenarios. At $67,200, the cumulative energy margin becomes positive again at $39,286,667, but the operating margin remains negative at -$110,925,420 and the accounting profit at -$718,705,391.

At $80,000, the cumulative operating margin becomes positive at $85,099,338, while the accounting profit remains negative at -$522,680,632. The full swing only appears in the $126,000 scenario, with a cumulative accounting profit of $181,783,343.

At this stage, the price of bitcoin alone is not enough to restore the balance of mining companies. The case of Riot shows that between energy costs, operating expenses and depreciation, profitability remains fragile. The market rebound is improving the situation, without yet closing all the fractures in the sector.