December 2, 2023

Bitcoin Developer Estimated BTC Ownership Cost at 2.1% per annum

According to the calculations of independent Bitcoin developer Tamas Blummer, the cost of transactions in BTC is growing andNow it is about 2.1% per annum.

Tamas Blummer provided his analysis of the cost of Bitcoin transactions in a publication on Medium. He estimates the cost of owning cryptocurrency currently averages 2.1% per year.

He notes that the most obvious costs— These are the fees associated with moving BTC in and out of wallets. The total amount of Bitcoin paid in transaction fees was around 50,000 BTC at the end of 2016. However, by the end of 2019, total fees had risen to over 200,000 BTC.

Bloommer explains that the newly mined coinsincrease supply in the market and will reduce commissions unless other factors appear that dominate price movements. One of these factors — capital inflows when fiat currencies flow into the Bitcoin economy during a bull market and leave it during a bear market.

Production costs are also considered significant.factor, since mining companies constantly have to sell part of their coins to cover expenses. Changes in mining profits can be observed through changes in complexity, notes Bloommer.

If market prices are not high enough to support mining, miners partially shut down equipment, which reduces complexity due to falling competition.

“The most recent example where mining difficultybegan to grow after a long decline, was in January 2019 at a BTC price of about $3,400 dollars. I suggest taking this as the most recent figure for estimating the cost of BTC mining." — Bloommer notes.

Thus, at the current price just below $ 8400,the profit from one mined BTC is $ 5,000 dollars. At 12.5 BTC, the mining industry's profit margin is currently $ 9 million per day. Dividing this figure by BTC’s current market capitalization of $ 150 billion, we get Bitcoin ownership at 2.1% per year, plus operating costs, which are still negligible.

“Storage costs will decrease significantly following the block reward halving in May 2020, as this will reduce miner profits,” — Bloommer states.

Short-term speculation may make the cost of ownership negligible for users, but investors should be aware of these estimates, Blummer concludes.

As a reminder, Bitcoin mining difficulty reached an all-time high in June of this year, demonstrating growing competition for new blocks among miners.