Bitcoin's next halving, to take place on Monday, will wipe out all inefficient miners, TokenInsight chief analyst Johnson Xu told Decrypt. But Xu said there is a way to keep these machines profitable: to find cheaper electricity.
Tomorrow, the amount of Bitcoin that miners receive for Bitcoin mining will be cut in half. This effectively reduces the revenue generated by mining, meaning miners will have to work twice as hard to get the same amount of Bitcoin. To compensate, mining farms will invest in more powerful miners, removing inefficient miners from the market.
But people with older miners can still make a profit after halving, Xu said, as long as they keep their electricity and operating costs “low enough”.
"If miners do not have access to more efficient mining machines, they should consider reducing electricity and operations expenses to compete with other miners and offset the disadvantages of having outdated hardware," he said.
There are a few ways in which miners can reduce electricity costs. Many mining farms are installed in places where electricity is very cheap, such as some regions in China. In China, “there are some miners who have access to electricity below $ 0.02 / kwh. However, these are extremely rare cases, ”said Xu.
Another way to save on costs would be to relocate Bitcoin miners to cold regions. In colder regions, machine operators do not need as much energy to cool.
But it won't last forever
Miners with access to cheap electricity would have a "significant advantage," said Xu, because they can continue to use outdated hardware to mine Bitcoin.
But they can only do this until the network's total hash rate – the metric for the combined computational power of Bitcoin miners – grows significantly due to the influx of more powerful machines.
"Once these newer mining machines slowly replace the network hash rate, they will end up eliminating all outdated hardware in the long run," he said.
"The best way to prepare for halving is to use the most efficient mining companies," said Xu.
* Translated and republished with authorization from Decrypt.co
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