In response to the impending Bitcoin halving and rising electricity costs in the United States, more than 6,000 outdated Bitcoin mining machines are set to undergo refurbishment and resale to global miners. Led by SunnySide Digital, these devices will find new homes in regions with lower electricity costs, such as Africa and South America, aiming to capitalize on the profitability potential during the halving event.
Increased Demand Amid Halving
According to a recent post by Bloomberg, the refurbishment process will take place in a warehouse in Colorado Springs. SunnySide Digital’s CEO, Taras Kulyk, describes this initiative as a “natural migration,” emphasizing the common practice among miners to seek lower-cost environments, particularly before significant events like the Bitcoin halving.
The Bitcoin halving, scheduled for late April 2024, will decrease the mining reward from 6.25 to 3.125 bitcoin, prompting miners to upgrade to more efficient technology to mitigate the impact on their revenue streams. This event, occurring every four years, underscores the importance of maximizing operational efficiency in the mining sector.
While the older S19 series of mining machines may not be profitable to run in the US post-halving, they still hold potential in regions like Africa, where electricity costs are lower. Jaran Mellerud, CEO of Hashlabs Mining, suggests that these machines can generate decent profits and have an extended life if hosted in favorable environments.
The resale market for outdated mining machines has witnessed significant price fluctuations, with the cost of S19 models dropping from $7,030 in March 2022 to $427 in March 2024. Some buyers anticipate further price drops post-halving, prompting them to postpone purchases.
Miners Also Opting for Relocation
Meanwhile, some US miners are choosing not to sell their hardware but instead are relocating to regions with lower electricity costs and third-party data centers. Nuo Xu, who operates two sites in Texas, is currently scouting locations in Ethiopia, Nigeria, and several other countries for around 6,000 older mining rigs.
Xu acknowledged the risks associated with moving his machines to Africa but emphasized the necessity due to the significantly cheaper electricity costs outside the US. He stated:
“Cheaper electricity outside the US means it will take a much shorter time to recover the overhead costs with labor and building materials also much less expensive.”
Retained Dormant Bitcoin Mining Machines
However, not all US-based equipment is exported. Publicly traded companies face challenges in relocating their hardware due to the need to consider risk-averse shareholders and concerns about transportation costs, breakage, and security issues.
For instance, Bit Digital Inc., a major Bitcoin miner, has older generations of computers stored in a warehouse in Houston. CEO Sam Tabar stated that these machines sometimes remain dormant but are retained because during periods of high bitcoin prices, they can still be utilized to generate profits.
Influx of Capital
The impending halving has spurred significant investments in mining hardware, with major players collectively spending over $1 billion on new machines since February 2023. This influx of capital underscores the industry’s preparation for the halving event and highlights the ongoing efforts to optimize mining operations amidst changing market dynamics.
As miners worldwide gear up for the Bitcoin halving, the refurbishment and resale of outdated mining machines represent another strategic move to maintain profitability in an evolving landscape.
