Will Aging Bitcoin Mining Rigs Find a Second Life Abroad?

With the halving of Bitcoin's block reward approaching, mining companies are facing increased pressure to reduce electricity costs to maintain profitability. Older mining machines, such as the S19 series, are becoming less profitable to operate in the US due to high electricity expenses. As a result, many miners are migrating these machines to regions with cheaper power, primarily Africa and South America. The sale of used S19 models is expected to drop further after the halving, with some buyers waiting to purchase them at even lower prices.

Will Old Bitcoin Mining Rigs Find New Life Overseas?

As electricity costs soar, bitcoin mining companies are scrambling to cut costs. For some, that means sending their older machines overseas.

Africa and South America: New Havens for Bitcoin Miners?

According to industry experts, an estimated 600,000 S19 series computers, which currently dominate the mining landscape, are being shipped out of the US, primarily to Africa and South America. The allure lies in the significantly lower power costs in these regions.

Halving Looms: Time to Upgrade or Relocate?

With the upcoming halving of bitcoin rewards, the pressure is on miners to upgrade to more efficient machines. The halving, which occurs every four years, will reduce the reward for mining a block from 6.25 bitcoin to 3.125 bitcoin.

Used Machines: A Bargain for International Buyers?

The halving has prompted a sell-off of older mining rigs, with prices plummeting. Buyers are flocking to these machines, anticipating that they can still generate profits in regions with cheaper electricity.

US Miners: Reluctant to Sell or Relocate?

Some US-based miners are opting to hold onto their older machines rather than sell them at a loss. Others are exploring the option of relocating their operations to regions with lower electricity costs.

Hosting Fees: A Critical Factor

For miners who lack their own facilities, hosting fees play a significant role in profitability. In Ethiopia, for example, hosting fees are around 5 US cents per kilowatt-hour, compared to 7 US cents in the US. This two-cent difference can make a substantial impact on margins.

Ethiopia: A Rising Star in Digital Mining

Ethiopia has emerged as a popular destination for bitcoin miners due to its abundant and affordable hydropower. The government has also relaxed regulations on crypto mining, making it an attractive investment destination.

Chinese Miners Flock to Ethiopia

Chinese bitcoin miners, facing regulatory crackdowns at home, are increasingly relocating their operations to Ethiopia. The country's favorable electricity rates and government support are major incentives.

Publicly Traded Miners: Balancing Risk and Profit

Publicly traded bitcoin mining companies face unique challenges in relocating their operations overseas. Shareholders' risk aversion and logistical concerns can make it difficult to move machines abroad.

Big Bucks for New Hardware

In anticipation of the halving, major bitcoin mining companies have invested heavily in new hardware. Since February 2023, they have ordered over US$1 billion worth of machines.

Fundraising Spree: Miners Seek Cash

To finance their expansion plans, five of the largest bitcoin miners have raised over US$2.7 billion through stock offerings in the past two years. This trend has continued in 2023, with an additional US$840 million raised so far.