Following the downturn in bitcoin’s price on Friday, the hashprice of bitcoin has declined from slightly above $119 per petahash per second to marginally over $116 per PH/s on a daily basis. Should the prices remain low leading up to the forthcoming halving event scheduled for next week, certain mining devices may only be viable if they operate on free or nearly free energy.
Upcoming Halving Poised to Put Heavy Strain on Miners Unless Bitcoin’s Price Rises
In just one week, bitcoin (BTC) miners are set to encounter their fourth halving event, which will halve their block rewards from 6.25 BTC to 3.125 BTC at block height 840,000. This Friday saw a notable decline in bitcoin’s price, dropping 5% in value, subsequently impacting mining revenues. As a result, bitcoin’s hashprice, the anticipated daily earnings from a certain percentage of hashing power, has dipped to $116 per PH/s. When broken down to 1 terahash per second (TH/s) per day, a single terahash’s worth amounts to $0.116.
While hashprice offers a glimpse into potential mining profits, other factors such as electricity costs play a crucial role. For example, even with electricity priced at $0.12 per kilowatt hour (kWh), the latest mining machines like Microbt’s Whatsminer M63S, Bitmain’s S21 in both hydro and air-cooled variants, and Microbt’s latest air-cooled units, still manage to yield a decent profit at today’s BTC exchange rates. However, the cost of acquiring these advanced machines is steep unless you’re a major miner purchasing in bulk.
Many home and solo miners continue to use older models like Bitmain’s vintage Antminer S9, which offers 13.5 TH/s of hashrate. With sufficiently low electricity rates, such as $0.01 per kWh, even an S9 can be profitable. However, once the halving takes effect and if prices remain stable or fall, sustaining profits with an S9 beyond block 840,000 could become quite challenging. As an example, a used S9 including a power supply can be purchased for $120 on Ebay or secondary markets, potentially generating $0.74 daily after 136 days to recuperate the initial cost, assuming electricity remains at $0.01 per kWh.
Consequently, over the past year, it hasn’t been the home or solo miners, but rather large-scale mining operations that have invested billions in the most recent equipment from manufacturers like Canaan, Microbt, Bitmain, and Auradine. The next-generation rigs produced by these companies offer higher hashrate outputs and enhanced efficiency in terms of joules per terahash (J/T). Utilizing these advanced rigs generally results in luckier outcomes, higher odds in mining, and more SHA256 hashrate for securing BTC block rewards.
Recent reports highlight that U.S.-based bitcoin mining operators are upgrading to newer application-specific integrated circuit (ASIC) rigs while offloading older models or relocating them to regions where electricity costs are significantly lower than in the United States. As the bitcoin mining landscape shifts towards more efficient technologies, the impending halving will test the resilience and adaptability of miners. With escalating equipment costs and fluctuating market prices, only operations with access to cheap energy and the latest technology will thrive.