Bitcoin Miners Shift Operations Ahead of Halving

With the highly anticipated Bitcoin halving event just weeks away, miners in the United States are taking proactive measures to mitigate the impact of reduced mining rewards. A significant number of older model S19 mining rigs are being relocated to regions with cheaper energy costs, particularly Africa and South America. This exodus is driven by the high energy costs in the US, which make it less profitable to operate older mining machines after the halving.

Bitcoin Miners Shift Operations Ahead of Halving Event

As the highly anticipated Bitcoin halving event of 2024 approaches, Bitcoin miners are actively preparing for its potential impact. Scheduled for April, the halving will effectively reduce the block reward for mining new Bitcoins by half, making the validation of transactions less financially lucrative.

Currently, miners receive 6.25 BTC for each validated block added to the Bitcoin network. However, post-halving, their earnings will be halved to 3.125 BTC per block. In response, many miners, particularly in the United States, are implementing adjustments to ensure continued profitability.

Exodus of Mining Machines from the US

According to Luxor Technology, a provider of crypto-mining services and logistics, approximately 600,000 S19 series mining rigs, a significant portion of those currently deployed in the US, are being relocated out of the country. As reported by Bloomberg, these mining computers are primarily being transferred to or sold in countries in Africa and South America.

The S19 series represents older models of Bitcoin mining machines that may no longer be cost-effective to operate in regions with high energy costs, such as the US. This explains the shift by US miners towards more efficient machines.

A major player in the Bitcoin mining industry, quoted in the Bloomberg report, indicated that while the S19 series and similar models may not be viable for operations in the US, they "can still generate decent profits and extend their lifespan" in certain regions of Africa.

Alternatively, some miners are opting to sell their hardware, with buyers in areas with low-cost electricity acquiring the older machines. Notable destinations for these purchases include Paraguay, Uruguay, Tanzania, and Ethiopia.

Luxor has observed that the upcoming halving event is influencing buyer behavior towards older mining machines. "Some buyers are delaying purchases until after the event, anticipating a further decline in prices," the company noted.

Ethiopia Emerges as a Crypto Mining Hub

Ethiopia, a nation situated in the Horn of Africa, is rapidly gaining prominence in the crypto and Bitcoin mining landscape. A substantial number of older mining machines from the US are being relocated to the East African country.

Ethiopia's low electricity costs are widely recognized as the primary driver behind this trend. The Bloomberg report highlights that electricity prices in Ethiopia hover around 3 cents per kilowatt-hour (kWh), compared to a range of 3 to 6 cents in the US.

In February, Bloomberg reported that Chinese crypto mining companies are ramping up investments in Ethiopia. While China's regulatory stance on cryptocurrency may have contributed to this move, Ethiopia's low energy costs appear to be the more significant factor.