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Second-hand Bitcoin Mining Rigs Head Overseas as Industry Braces for Halving Event

Published March 26, 2024
2 months ago

Bitcoin miners in the United States face a significant shift as the cryptocurrency's upcoming halving event is set to slash the reward for mining activities, pushing many to upgrade their hardware. Approximately 6,000 older mining machines will soon depart from their American operations to a Colorado Springs warehouse. Run by wholesaler SunnySide Digital, this 35,000 square-foot facility will become a hub for refurbishing and reselling these units to international buyers in lower-power-cost regions.

The machines earmarked for refreshment are part of a larger wave of hardware expected to be cycled out following the Bitcoin blockchain update, occurring every four years. The event, scheduled for late April, will halve the Bitcoin reward from 6.25 to 3.125 tokens, prompting miners to seek out the latest and most energy-efficient technology to sustain profits.

Significant mining entities, including Marathon Digital Holdings Inc. and Riot Platforms Inc., are amongst those looking to reduce electricity expenditures, the largest cost in crypto mining. Though outdated in a U.S. context, their soon-to-be-retired hardware could still be lucrative elsewhere, particularly in regions with substantially lower power costs.

SunnySide Digital CEO Taras Kulyk notes that the used machinery finds new life in nations like Ethiopia, Tanzania, and Paraguay, where operating costs are minimal. This relocation trend is accentuated by the impending halving.

Luxor Technology's COO, Ethan Vera, estimates a vast number of S19 series computers—popular mining equipment—will exit the U.S., headed primarily for Africa and South America. As the halving looms, the positioning of efficient machines becomes ever more critical to avoid operational losses.

While these older mining models may lose their edge in the U.S., they are anticipated to continue generating profits in regions like Africa, as per Jaran Mellerud, CEO of Hashlabs Mining. The expectation is that post-halving, the costs of these S19 model miners will further decrease, making them even more attractive to international miners.

Miners like Nuo Xu are exploring opportunities in countries with friendlier electricity prices, such as Ethiopia and Nigeria. The lower costs not only for power but also for labor and materials could quicken the amortization of miners' overheads. Hosting fees, including electricity and labor, are significantly lower in these nations, rendering African countries increasingly pivotal in the global digital mining ecosystem.

Despite the migration of hardware, some American companies hold back equipment due to logistical constraints and shareholder conservatism. Bit Digital Inc., for example, retains older computers within the U.S., banking on occasional profitability surges when Bitcoin prices peak.

In anticipation of the halving, the industry sees major investments in hardware replacements. Public Bitcoin-mining companies have spent over a billion dollars on new machines since February 2023, with substantial capital raises within the sector supporting this technological overhaul.

In conclusion, as the Bitcoin halving heralds transformative change in the mining landscape, a notable shift in hardware distribution sets the stage for a new phase in the global distribution of mining operations.

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