US Bitcoin Miners Gear Up for Halving, Relocate Aging Equipment Abroad

In anticipation of the upcoming Bitcoin halving, aging mining equipment from the United States is being relocated to regions with cheaper electricity. Driven by the need to maintain profitability amidst reduced mining rewards and rising operational costs, US miners are decommissioning older machines and refurbishing them for resale overseas, particularly in areas with lower energy costs. This migration is expected to accelerate as the halving approaches, with an estimated 600,000 S19 series computers relocating from the US to regions primarily in Africa and South America.

U.S. Bitcoin Miners Prepare for Halving, Relocating Aging Equipment Overseas

With the highly anticipated Bitcoin halving event approaching in late April, a significant migration of outdated mining equipment from the United States to regions offering more affordable electricity is underway. This relocation is primarily driven by the need to maintain profitability amid reduced mining rewards and rising operational costs.

Decommissioning and Resale of Aging Equipment

According to a recent Bloomberg report, approximately 6,000 aging Bitcoin mining machines are slated to be decommissioned in the U.S., with plans to refurbish and resell them overseas, particularly in areas with lower energy costs. Wholesaler SunnySide Digital is a key player in this movement, operating a 35,000-square-foot facility in Colorado Springs. The company is refurbishing and reselling the aging equipment to international buyers eager to capitalize on mining in more cost-effective environments. SunnySide Digital anticipates receiving and revamping several hundred thousand units around the time of the Bitcoin halving.

Impact of Halving on Mining Profitability

The impending halving will significantly reduce the mining reward from 6.25 to 3.125 Bitcoin. As a result, miners are facing pressure to maximize efficiency to remain profitable. Many are turning to newer, more efficient machines, rendering 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"It's a natural migration," remarked Taras Kulyk, CEO of SunnySide Digital, noting that purchasers of outdated machines gravitate towards regions with the most affordable power.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 such as Ethiopia, Tanzania, Paraguay, and Uruguay, emphasized that this trend is being accelerated by the impending halving event.

Global Relocation of Mining Infrastructure

According to Ethan Vera, COO of Luxor Technology, an estimated 600,000 S19 series computers, comprising a significant portion of the current mining infrastructure, are being relocated 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 substantial difference in electricity costs between the U.S. and regions like Ethiopia, where costs are significantly lower.

Retention of Equipment by Publicly Traded Companies

It is important to note that not all U.S.-based equipment will be exported. Publicly traded companies like Bit Digital have opted to retain older equipment, leveraging them during periods of high Bitcoin prices to generate profits.

Investment in New Hardware

In preparation for the halving, miners globally are investing heavily 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.

Conclusion

The Bitcoin halving event is driving a significant migration of outdated mining equipment from the United States to regions offering more affordable electricity. Miners are facing pressure to maximize efficiency and reduce costs to maintain profitability in the face of reduced mining rewards. The relocation of aging equipment and investment in new hardware underscores the ongoing evolution of the Bitcoin mining industry as it adapts to changing market dynamics.