Data recently released by Hashlabs Mining reveals that 40% of Bitcoin (BTC) mining activities take place in the United States. However, experts in the industry have predicted that the upcoming halving event may prompt U.S.-based miners to move their operations offshore.
Raphael Zagury, the Chief Investment Officer at Swan Bitcoin, a financial services company focused on Bitcoin, believes that the halving will have a significant impact on U.S. miners, cutting their revenue in half. Zagury states that this event will act as a filter, separating efficient and profitable miners from those who are less capable.
The next halving is scheduled to occur in April, which will reduce the Bitcoin mining reward from 6.25 BTC to 3.125 BTC. This reduction in mining rewards will affect miners worldwide, but regions with a high concentration of miners are expected to face the greatest challenges.
U.S. miners are focusing on energy efficiency post-halving. Haris Basit, the Chief Strategy Officer at Bitdeer, a publicly traded mining service provider, explains that they have been preparing for halving events well in advance to ensure efficient operations. Bitdeer prioritizes low electricity costs to maintain profitability across its six mining facilities worldwide.
Basit emphasizes that Bitdeer regularly discloses its power costs and has one of the lowest electricity costs in the industry. They are continually working to lower energy costs through various ongoing efforts. The impact of the halving on Bitdeer’s operations in the U.S. will largely depend on the price of Bitcoin at the time of the event.
The hash rate of the Bitcoin network, which measures the total computational power used by miners, has been steadily increasing since April 2021. However, a decrease in block rewards combined with the high energy consumption required for mining may lead to some miners going offline after the halving. Basit explains that the effect will be more significant for mining operations with higher costs, but if the price of Bitcoin is substantially higher than current levels, the impact will be different.
Jamie McAvity, the CEO of Cormint Data Systems, a Bitcoin mining company based in Ft. Stockton, Texas, reveals that approximately 50% of mining computers currently have an efficiency between 30 and 40 joules per terahash. This means that the electricity breakeven price for these computers is around $0.08 per kilowatt-hour. If the halving were to occur today, many of these computers would no longer be profitable unless the electricity cost was $0.04 per kilowatt-hour or lower.
McAvity anticipates difficulty adjustments after the halving. Mining difficulty measures the level of challenge in solving the cryptographic puzzles used in the mining process. He believes that there will be little hash rate growth during the summer of 2024 due to lower mining breakevens, peak electricity demand, and high prices.
Despite the challenges posed by the halving, experts in the industry still believe that Bitcoin’s global hash rate will increase. Zagury points out that historical evidence shows resilience and growth in the hash rate, barring significant events like China’s mining ban in May 2021.
McAvity remains optimistic as well, stating that while the hash rate may decline from April to October, it may reach an all-time high afterward. He explains that most miners will be operating at high uptimes during October 2024, coinciding with the end of the summer.
However, McAvity acknowledges that these predictions may only hold true in the current Bitcoin price environment. If Bitcoin experiences a significant rally, it will create a strong mining incentive, and the halving may have minimal impact on mining economics.
Bitdeer has ambitious plans for expansion, with over one gigawatt of new facilities planned in the next 24 months. Basit believes that these expansions, combined with improved mining rig efficiency, will lead to significant growth in the global hash rate. However, he notes that the price of Bitcoin will also need to rise to support such increases.
Basit concludes by stating that the halving has historically been followed by a boom cycle for Bitcoin, and he expects the Bitcoin price to continue supporting long-term increases in the global hash rate.