US Dominates Bitcoin Mining But Halving Event May Challenge Future Operations
Summary:
The United States currently dominates 40% of Bitcoin mining operations according to Hashlabs Mining. However, the looming Bitcoin halving event - set to cut mining rewards from 6.25 BTC to 3.125 BTC in April - is predicted to challenge these operations, especially in areas with a high concentration of miners. Despite potential short-term setbacks from the halving, industry experts still expect Bitcoin's hash rate to continue to rise thereafter. Future plans for the global mining rate includes Bitdeer’s vision for adding over one gigawatt of new facilities within the next 24 months.
A recent report from Hashlabs Mining indicated that 40% of Bitcoin (BTC) mining is concentrated in the United States. However, industry insiders predict the forthcoming halving event – which reduces mining reward by half - could drive US-miners overseas. Raphael Zagury, chief investment officer at Bitcoin-focused financial company, Swan Bitcoin, affirmed the halving will undeniably impact US miners, effectively severing their revenue. Zagury sees this as a litmus test distinguishing profitable miners from less efficient ones. The forthcoming halving event, expected in April, will reduce Bitcoin mining rewards from 6.25 BTC to 3.125 BTC. This drop in rewards will affect miners around the world, but areas with a high miner population will likely grapple with the greatest difficulties.
Haris Basit, chief strategy officer at Bitdeer – a global mining service provider, asserts that halving events are one of the most predictable in cryptocurrency. Knowing this, Basit stated Bitdeer has been making provisions years ahead of these events to ensure their operations continue to run efficiently. Low electricity expenses are a priority for Bitdeer to sustain profitability in its six global mining facilities.
Basit, overseeing three mining facilities in America, remarked the level of effect the halving will have on their operations is contingent on Bitcoin's cost during the event. If Bitcoin’s price stays around its current levels, a decrease in the global hash rate, including US operations of some companies, will be inevitable.
The overall computational power utilized by miners, known as hash rate, has steadily grown since April 2021, hitting record highs in January 2024, BitInfoCharts data reveals. However, the upcoming reduction in block rewards and high energy consumption required for mining may prompt miners to go offline post-halving.
Jamie McAvity, CEO at Cormint Data Systems, a Bitcoin mining firm in Texas, predicted certain difficulty adjustments will ensue after the halving. Given that Cormint had the lowest energy cost in H1 2023, McAvity mentioned a mining strategy of operating during profitable periods only post-halving, to maintain profitability. He added that miners with flexible uptime and lower energy costs will be best positioned after the halving.
Contrasting the forthcoming challenges of halving, industry professionals anticipate Bitcoin’s global hash rate will continue to grow. Any price rally of Bitcoin could create a strong mining incentive, reducing the impact of halving on mining economics. In conclusion, Basit disclosed Bitdeer’s plan for over one gigawatt of new facilities in the next 24 months. This will lead to significant growth in the global hash rate, provided Bitcoin price supports it.
Published At
2/28/2024 5:01:00 PM
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