IT COSTS more money to make bitcoin than the cryptocurrency is worth. Producing a single bitcoin now costs $4060 on average, but it is valued at less than $3500, according to an analysis by JPMorgan Chase.
Bitcoin relies on volunteers to process transactions. Their computers race to solve a mathematical puzzle once every 10 minutes. Finding a solution processes a batch of transactions and whoever gets there first is rewarded with some bitcoin.
Purchasing and running these computers is expensive. As more people joined the race, the puzzles have become harder to solve, requiring more computer power. It is estimated that the bitcoin network uses as much energy as Ireland.
Bitcoin’s price has tumbled in recent months from a high of nearly $20,000 in 2017. The result is that processing transactions is no longer profitable. However, this will probably cause people to drop out of the race, making it easier and economically viable again.