Bitcoin Miners Move Operations Overseas as Halving Slashes Revenue

In anticipation of the Bitcoin halving, which will significantly reduce mining rewards, an estimated 6,000 outdated mining machines in the US will be decommissioned and refurbished for resale to overseas buyers seeking cost-effective mining opportunities. This mass exodus of older machines is driven by the need to reduce electricity costs, the largest expense for mining companies. As a result, mining operations are expected to relocate to regions with lower energy costs, such as Africa and South America.

Bitcoin Miners Shift Operations Overseas Amid Halving-Driven Revenue Decline

Approximately 6,000 aging Bitcoin mining machines in the United States will be decommissioned and shipped to a refurbishment facility in Colorado Springs, Colorado. The equipment will be refreshed and resold to international buyers seeking to capitalize on lower mining costs.

Wholesaler SunnySide Digital manages the 35,000-square-foot facility receiving the machines from a mining client. The obsolete units are part of a larger pool of several hundred thousand machines that SunnySide Digital anticipates receiving and refurbishing in the lead-up to a significant quadrennial update in the Bitcoin blockchain.

Known as the halving, the event scheduled for late April will drastically reduce the block reward, which constitutes the primary revenue stream for miners. To mitigate the impact, miners are upgrading to the latest, most efficient technology.

With electricity representing the largest expense, publicly traded mining giants such as Marathon Digital Holdings Inc. and Riot Platforms Inc. must minimize their energy consumption to maintain profitability. While their older machines may still generate profits, they are unlikely to do so in the United States.

"It's a natural migration," said Taras Kulyk, Chief Executive Officer of SunnySide Digital, which has resold US-based computers to miners in Ethiopia, Tanzania, Paraguay, and Uruguay. "This is accelerated by the halving."

According to Ethan Vera, Chief Operating Officer at Seattle-based crypto-mining services and logistics provider Luxor Technology, approximately 600,000 S19 series computers, which account for the majority of machines currently in use, are being relocated from the US, primarily to Africa and South America.

In Bitcoin mining, specialized machines are utilized to validate transactions on the blockchain, earning operators a fixed token reward. The halving event will reduce this reward by 50%, forcing miners to seek more cost-effective locations to maintain profitability.

The shift overseas is expected to intensify as the halving approaches. Miners are evaluating their options, considering factors such as energy costs, regulatory environments, and infrastructure availability. Countries with low electricity rates and supportive regulatory frameworks are likely to attract a significant portion of the displaced mining operations.

The exodus of mining operations from the US highlights the challenges facing the industry in the face of declining revenue streams. Miners must continuously adapt to changing market conditions and technological advancements to remain profitable. The halving event will undoubtedly accelerate this process, leading to a global redistribution of Bitcoin mining operations.