Reducing the reward for a mined block makes it unprofitable to use less energy-efficient equipment in the US

Bloomberg: Miners from Africa and South America are buying old equipment in the United States ahead of halving

25.03.2024 - 13:45

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3 min

What’s new? Industry experts interviewed by Bloomberg claim that the upcoming halving of the Bitcoin network will trigger a mass exodus of outdated mining rigs from the United States to regions with low energy costs, such as Ethiopia and Paraguay, where they can continue to generate profits. US miners are looking to upgrade their fleets and improve their energy efficiency, as halving the reward for a mined block in the blockchain, the main source of revenue for such companies, will be cut in half.

Bloomberg’s material

Halving is code’s embedded cut in half of the reward to miners for a mined block on the blockchain, which occurs approximately every four years. Initially, miners received 50 BTC; on November 28, 2012, the number dropped to 25 BTC, on July 9, 2016, to 12,5 BTC, and on May 11, 2020, to 6,25 BTC. In April 2024, the award will be cut to 3,125 BTC

What else is known? Luxor Technology chief operating officer Ethan Vera estimates that about 600 000 of manufacturer Bitmain’s most popular Antminer S19 devices are being shipped out of the US, to Africa, and South America. The S19 and similar models may not be profitable in the US after halving, but “can still generate decent profits” in parts of Africa, according to Hashlabs Mining CEO Jaran Mellerud.

SunnySide Digital Chief Executive Officer Taras Kulyk also notes that buyers of used miners operate in regions with the cheapest electricity, such as Ethiopia, Tanzania, Paraguay, and Uruguay, and calls such resale a natural migration.

According to Lauren Lin, Luxor’s business development director, some buyers are waiting until halving time to make deals, expecting prices to fall even further. Used S19 models in March 2022, for example, cost about $7030; a year later, the price had dropped to $900. It is currently at $427 and is expected to drop to $356 in May after halving.

Miners have been preparing for the halving for years and have spent a lot of money replacing their old equipment. According to TheMinerMag, 13 of the largest publicly traded BTC mining companies, including Riot Platforms and CleanSpark, have placed purchase orders for more than $1 billion worth of equipment since February 2023.

US president has again proposed to impose a 30% tax on mining

US president has again proposed to impose a 30% tax on mining

Last year, the head of the country proposed similar measures, but they were rejected by Congress

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Earlier, miner Bitfarms announced the launch of a 100MW mining farm in Paraguay in the second half of the year.

Last year, the issuer of the largest stablecoin, USDT, joined the construction of farms in Uruguay, Paraguay, and El Salvador.

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