As the much-anticipated Bitcoin halving event looms in late April, a migration of outdated mining equipment from the United States to regions offering cheaper electricity is underway.
This migration is driven by the need to maintain profitability due to reduced mining rewards and escalating operational costs.
US Bitcoin Miners Prepare for Halving
According to a Bloomberg report, approximately 6,000 aging Bitcoin mining machines are set to be decommissioned in the U.S., with plans to refurbish and resell overseas, particularly in areas with lower energy costs.
Wholesaler SunnySide Digital is at the forefront of this movement, operating a 35,000-square-foot facility in Colorado Springs. The company is refurbishing and reselling the aging equipment to overseas buyers keen to capitalize on mining in more cost-effective environments. They expect to receive and revamp several hundred thousand units around the Bitcoin halving time.
The impending halving will slash the mining reward from 6.25 to 3.125 Bitcoin. As a result, miners are under pressure to maximize efficiency to remain profitable, with many turning to newer, more efficient machines, making older models less viable, particularly in high-cost regions like the United States.
“It’s a natural migration,” remarked Taras Kulyk, CEO of SunnySide Digital, noting that purchasers of outdated machines gravitate towards regions with the most affordable power. Kulyk, who has facilitated the sale of U.S. computers to miners in nations like Ethiopia, Tanzania, Paraguay, and Uruguay, emphasized that this trend is being expedited by the impending halving event.
Bitcoin Miners Flock Overseas
According to Ethan Vera, COO of Luxor Technology, an estimated 600,000 S19 series computers, comprising most of the current mining infrastructure, are relocating from the U.S. to regions primarily in Africa and South America.
Jaran Mellerud, CEO of Hashlabs Mining, points out that while older machines may no longer be profitable in the U.S. post-halving, they can still yield returns when hosted in regions with lower electricity expenses.
Despite risks associated with international relocation, such as transport costs and security concerns, miners like Nuo Xu are compelled to move their equipment to areas with cheaper electricity. Xu highlighted the significant difference in electricity costs between the U.S. and regions like Ethiopia, where costs are substantially lower.
Notably, not all U.S.-based equipment will leave the country. Publicly traded companies like Bit Digital opt to retain older equipment, leveraging them during periods of high Bitcoin prices to generate profits.
In preparation for the halving, miners globally are investing in new hardware. TheMinerMag, a crypto-mining researcher, reports that major public Bitcoin-mining companies have collectively ordered over $1 billion worth of machines since February 2023.
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