As the next Bitcoin halving event looms on April 24, 2024, industry experts warn of potential consequences for high-cost public miners in the United States. With the halving set to slash Bitcoin miner rewards in half, concerns are mounting over the profitability of mining operations, leading some to speculate about a possible “mining stock bloodbath” and an exodus of miners offshore.
Jaran Mellerud, co-founder and chief mining strategist at Hashlabs Mining, foresees a challenging landscape for US-based miners if Bitcoin’s price fails to rise substantially post-halving. With rewards set to drop from 6.25 BTC to 3.125 BTC, profitability could be severely impacted, especially for miners facing high operating costs.
Historically, Bitcoin halving events have been followed by price surges, but the timing of these surges is crucial. Mellerud emphasizes the three to four-month window following the halving as a critical period to gauge miner profitability. If Bitcoin fails to rally during this time, many miners, particularly those with high operating costs, may be forced to shut down operations.
The potential fallout from unprofitable mining operations could lead to a shift in Bitcoin’s hash rate from the US to countries offering cheaper electricity rates, such as those in Africa and Latin America. Mellerud cites Ethiopia, Nigeria, Kenya, Argentina, and Paraguay as potential beneficiaries of such a migration.
Ethiopia, in particular, stands out due to its abundant hydropower resources, attracting Chinese miners and positioning itself as a significant player in the global mining landscape. Mellerud predicts that Ethiopia could capture 5-10% of Bitcoin’s total hash rate in the coming years.
Various Opinions Regarding the Halving
However, opinions vary regarding the impact of the halving on US miners. While some express concerns about profitability, others believe that most US miners, especially those with low electricity rates and efficient mining equipment, will remain profitable.
Mitchell Askew, head analyst at Blockware Solutions, suggests that any potential loss in hash rate from US miners would be negligible in the broader context of Bitcoin’s network. Additionally, factors such as fixed hosting contracts and non-profit-driven mining activities may deter miners from relocating offshore.
Despite differing perspectives on the immediate impact of the halving, one thing remains clear: the landscape of Bitcoin mining is evolving rapidly, with geographical shifts in hash rate distribution becoming increasingly likely. As the industry braces for the next halving event, the fate of US miners and the global mining ecosystem hangs in the balance.
