Bitcoin ‘Halving’ Spurs Exodus of Old US Mining Computers Abroad

Bloomberg03-23

(Bloomberg) -- About 6,000 older Bitcoin mining machines in the US will soon be idled and sent to a warehouse in Colorado Springs where they’ll be refreshed and resold to buyers overseas looking to ...

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Putin Says Moscow Attack Suspects Detained on the Way to Ukraine. Catherine, Princess of Wales, Says She’s Being Treated for Cancer. Baltimore Wants to Sell Hundreds of Vacant Homes for $1 Each. While S19 series and similar models might not be profitable to run in the US after the halving, they “can still generate decent profits and get an extended life if hosted” in parts of Africa, said Jaran Mellerud, CEO at Dubai-based Hashlabs Mining, which leases data ce","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"FBTC":"Fidelity Wise Origin Bitcoin Fund","DEFI":"Hashdex Bitcoin ETF","MARA":"Marathon Digital Holdings Inc","BITB":"Bitwise Bitcoin ETF","ARKB":"ARK 21Shares Bitcoin ETF","BITO":"ProShares Bitcoin Strategy ETF","BTCO":"Invesco Galaxy Bitcoin ETF","BK4023":"应用软件","EZBC":"Franklin Bitcoin ETF","BTCW":"WisdomTree Bitcoin Fund","IBIT":"iShares Bitcoin Trust","HODL":"VanEck Bitcoin Trust ETF","BK4585":"ETF&股票定投概念","GBTC":"Grayscale Bitcoin Trust","BK4594":"比特币ETF概念","BTBT":"Bit Digital, Inc.","BRRR":"Valkyrie Bitcoin Fund","BK4595":"比特币概念","RIOT":"Riot Platforms"},"translate_title":"比特币“减半”刺激旧美国采矿电脑外流","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BITB":1,"IBIT":1,"HODL":1,"GBTC":1,"FBTC":1,"EZBC":1,"DEFI":1,"BTCW":1,"BTCO":1,"BRRR":1,"BITO":1,"ARKB":1,"BTBT":0.9,"MARA":0.9,"RIOT":0.9},"content_text":"(Bloomberg) -- About 6,000 older Bitcoin mining machines in the US will soon be idled and sent to a warehouse in Colorado Springs where they’ll be refreshed and resold to buyers overseas looking to profit from mining in lower-cost environs. \nMost Read from Bloomberg\n\nPutin Rejected Terror Alert Before Deadliest Attack in Decades\nPutin Says Moscow Attack Suspects Detained on the Way to Ukraine\nCatherine, Princess of Wales, Says She’s Being Treated for Cancer\nNY Gears Up to Seize Trump Westchester Assets If Fraud Fine Is Unpaid\nBaltimore Wants to Sell Hundreds of Vacant Homes for $1 Each\n\nWholesaler SunnySide Digital operates the 35,000 square-foot facility taking in the equipment from a mining client. The outdated machines are among several hundred-thousand it expects to receive and refurbish around a major quadrennial update in the Bitcoin blockchain.\nKnown as the halving, the late April event will slash the reward that’s the main revenue stream for miners, who will try to lessen the impact by upgrading to the latest and most efficient technology. With electricity the biggest expense, mining companies including publicly traded giants Marathon Digital Holdings Inc. and Riot Platforms Inc. need to lower usage costs to maintain a positive margin. Their older computers may still bring a profit, just not likely in the US. \n“It’s a natural migration” with buyers of the old machines operating in parts of the world where power is the cheapest, said SunnySide Digital Chief Executive Officer Taras Kulyk, who has resold US computers to miners in countries such as Ethiopia, Tanzania, Paraguay and Uruguay. “This is accelerated by the halving.”\nSome 600,000 S19 series computers, which account for a majority of machines currently in use, are moving out of the US mostly to Africa and South America, according to an estimate by Ethan Vera, chief operating officer at crypto-mining services and logistics provider Luxor Technology in Seattle.\nIn Bitcoin mining, specialized machines are used to validate transactions on the blockchain and earn operators a fixed token reward. Anonymous Bitcoin creator Satoshi Nakamoto baked in the once-every-four-years halving to maintain the hard cap of 21 million tokens. Next month’s event is the fourth since 2012 and the reward will drop to 3.125 Bitcoin from 6.25 now.\nRead more: What Is Bitcoin ‘Halving’? Does It Push Up the Price?: QuickTake\nBitcoin has surged about 50% this year to around $63,500, though it’s down from a record high of $73,798 reached on March 14. Bringing more efficient machines online has become more urgent with the halving just weeks away, as continued use of older equipment could mean electricity costs will be close to or exceed mining revenue. \nWhile S19 series and similar models might not be profitable to run in the US after the halving, they “can still generate decent profits and get an extended life if hosted” in parts of Africa, said Jaran Mellerud, CEO at Dubai-based Hashlabs Mining, which leases data center space in Ethiopia and provides hosting services to Bitcoin miners.\nPrice Drop\nSome buyers are waiting until after the event to purchase older computers, assuming their prices will drop even more, said Lauren Lin, Luxor’s business development director. The used S19 models cost about $7,030 in March 2022, according to Luxor, which runs a trading desk for used machines. The price dropped dramatically a year later to about $900 as Bitcoin prices sank, then to about $427 this month and is estimated to sell for about $356 in May, after the halving. \nThere are miners in the US opting not to sell their hardware and instead transfer the equipment to regions with lower electricity costs and third-party data centers. Nuo Xu, who has two sites in Texas, is traveling this month to Ethiopia, Nigeria and a few other countries to scope out locations for about 6,000 older computers.\n“There are more risks for my machines in Africa but I have to move them there,” he said. “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, he said.\nHosting Fees\nMiners globally who don’t have their own facilities pay a hosting fee, which typically includes electricity, labor and third-party operators. It’s been Xu’s experience that fees in the US come to about 7 cents per kilowatt hour. In Ethiopia, which has loosened regulations on crypto mining and increased its power generation, the rate is about 5 cents, according to Hashlab’s Mellerud. That two-cent difference is huge for miners.\nElectricity itself is about 3 cents per kWh in Ethiopia, according to Hiwot Eshetu, marketing and business development director at Ethiopian Electric Power. In the US, the range is about 3 cents to 6 cents, based on estimates from Luxor. \n“Ethiopia is really becoming a big player in the digital mining ecosystem,” said SunnySide’s Kulyk, who added his company is negotiating a deal to help move between 20,000 and 40,000 rigs to the east African nation.\nRead More: Chinese Bitcoin Miners Find a New Crypto Haven in Ethiopia\nNot all US-based equipment leaves the country. That process can be tougher for publicly traded companies because they have to take risk-averse shareholders into account. There’s also some hesitation to relocate machines abroad due to transportation costs, breakage and security concerns.\nPublicly traded Bit Digital Inc., one of the biggest Bitcoin miners, has older generations of computers sitting dormant in a warehouse in Houston. \n“These machines basically collect dust every now and again,” said CEO Sam Tabar. But the New York-based company holds onto them because when Bitcoin prices are high, the computers can be pulled out of retirement and still make a profit, he said.  \nBig Bucks\nMiners have been prepping for the halving for years and are spending big bucks to replace their older hardware. The 13 major public Bitcoin-mining companies, including Riot Platforms and CleanSpark Inc., have placed orders for more than $1 billion worth of machines since February 2023, according to crypto-mining researcher TheMinerMag.\nFive of the biggest miners raised more than $2.7 billion from selling shares in the two years ended in December. Since the start of this year, those same miners have raked in an additional $840 million, according to the researcher.\nMost Read from Bloomberg Businessweek\n\nElon Musk’s Don Lemon Implosion\nWeight-Loss-Drug Users Pay Up for Help Ditching the Pricey Meds\nMagnificent Seven? It’s More Like the Blazing Two and Tepid Five\nWall Street and Silicon Valley Elites Are Warming Up to Trump\nThe Fed’s Foot-Dragging Is Making the Last Mile Harder\n\n©2024 Bloomberg L.P.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2421359607"}