Crypto miners keep busy ahead of halving with accelerated machine buys

12/13/2023 0 Comments

1. Crypto miners keep busy ahead of halving with accelerated machine buys

While Marathon Digital extended its hash rate lead on North American competitors in the past month, Riot Platforms and Bitfarms are among those looking to catch up via major machine buys ahead of the bitcoin halving.

Meanwhile, Hut 8 recently closed its merger with US Bitcoin Corp in a move executives have said helps the firm not only boost mining capacity, but further diversify its revenue streams.

The plethora of miner moves comes as the next bitcoin halving looms. Slated for April, industry watchers expect the event that cuts per-block miner awards from 6.25 bitcoin (BTC) to 3.125 BTC to put stress on industry players.

“It seems like the upcoming halving and this year’s market rebound from the 2022 bottom has bolstered mining companies’ capital expenditure,” BlocksBridge Consulting said in a Thursday research post.

This year, a dozen public mining companies have placed orders for Bitcoin (BTC) mining machines. According to data from BlocksBridge’s resource The MinerMag, these orders total more than 70 exahash per second (EH/s) in capacity.

The commitments made in 2023 amount to roughly $1.2 billion, with about $750 million in deals inked over the past two months.

Who has been most aggressive?

Dan Weiskopf, a co-portfolio manager of the Amplify Transformational Data Sharing ETF (BLOK), previously told Blockworks that large-scale miners “need to be bold and think two steps ahead of [their] peers” — adding some in the space “will not survive the halving.”

The largest miner purchase of the year came from Riot Platforms on Monday, in the form of 66,560 MicroBT machines for $290.5 million. The largest hash rate purchase in the company’s history, it amounts to about 18 EH/s of mining capacity, Riot said.

Riot’s deployed hash rate was 12.4 EH/s at the end of November, the company said Wednesday.

The company can purchase up to 265,000 more MicroBT miners on the same terms in the future, which would add 75 EH/s to the company’s self-mining capacity.

Bitfarms has also added miners, last week buying nearly 36,000 Bitmain T21 miners as part of “a transformative fleet upgrade plan.” The buy, as well as an option to purchase offer a pathway to increase the miner’s hashrate — at 6.3 EH/s on Nov. 27 — to 17 EH/s by the latter half of next year.

“This strategy is expected to significantly increase efficiencies along with lower unit production costs and dramatic hashrate growth, positioning us well for the upcoming halving and beyond,” Bitfarms CEO Geoff Morphy said in a statement.

CleanSpark is another miner set to add substantial hash rate, making a deal in October to buy 4.4 EH/s worth of Antminer machines. The company reported a hashrate of about 10.1 EH/s at the end of November and expects to start adding the recently acquired machines in January.

Hut 8 and US Bitcoin Mining Corp is now one company with an installed hash rate capacity of 7.5 EH/s. But Hut 8 CEO Jaime Leverton has said the company is “not here to simply chase exahash,” noting its focus on diversifying the business.

2. Analyzing Bitcoin Halving – Impact on Price Dynamics and Market Sentiment

Bitcoin (BTC), a prominent cryptocurrency, undergoes significant milestones referred to as ‘halving’ events, which wield substantial influence over its network dynamics. These events involve reducing the mining reward by half. Before 2020, miners received 12.5 BTC for successfully mining a block. In this article, we’ll delve into the economics behind Bitcoin’s halving, examining its impact on price movements and market sentiment. Understanding these dynamics offers valuable insights for both investors and cryptocurrency enthusiasts.

Bitcoin halving overview

Bitcoin halving is an event occurring every four years in the network. It involves the reduction of the block reward received by Bitcoin miners for adding new blocks to the blockchain. Initially set at 50 Bitcoin for each block in 2009, the reward was later halved to 25 Bitcoin in 2012 and further reduced to 12.5 Bitcoin in 2016. This event influences not only supply control but also the economics of Bitcoin mining, incentivizing miners to become more efficient and adapt to lower rewards.

Supply and demand dynamics

Bitcoin halving directly impacts the supply and demand dynamics of the cryptocurrency. By reducing the rate at which new BTC enters the market, halving effectively decreases the available supply. According to basic economic principles, when supply decreases while demand remains constant or increases, the price of Bitcoin tends to rise.

The scarcity effect generated by reduced supply may drive the price upwards if demand remains steady or increases. Bitcoin’s controlled supply – limited to 21 million coins – is a crucial factor in its value proposition. The halving mechanism gradually reduces the rate of new BTC production until the maximum supply is reached.

This scarcity, combined with increasing recognition and adoption, creates a perception of limited availability, potentially increasing demand and impacting the price.

Historical price movements

Historically, halving events have been linked with substantial increases in Bitcoin’s price, exhibiting significant upward momentum before and after previous halvings. For instance, during the 2012 halving, Bitcoin’s price surged from about $12 to over $200 within a year. Similarly, after the 2016 halving, Bitcoin experienced a notable recovery, reaching around $19,700 in December 2017. After the most recent halving in May 2020, Bitcoin’s price surged from $8,787 to nearly $69,000 in November 2021.

Investor sentiment and market perceptions

Bitcoin halving events often trigger heightened market attention and anticipation. The prospect of reduced supply and potential price surges tends to foster positive sentiments among investors and traders. This optimistic outlook could drive increased demand for Bitcoin as traders seek to capitalize on anticipated price hikes.

Consequently, a Bitcoin halving might create a self-fulfilling prophecy, boosting market sentiment and spurring demand. However, it’s important to note that during halving events, market sentiment isn’t always uniformly positive.

There can be instances where market participants experience FUD (fear, uncertainty and doubt) concerning the potential consequences of a price halving. Conflicting sentiments can lead to short-term price fluctuations and increased market volatility.

Network security and long-term outlook

Despite the initial impact on mining economics, Bitcoin’s halving plays a vital role in ensuring the network’s long-term security and stability. The carefully managed decline in block rewards encourages miners to continue securing the network through transaction validation. As mining adapts to decreased block rewards, the network becomes more robust and less reliant on freshly created currencies for security.

Impact on mining economics

The decrease in block rewards caused by halving directly affects miner profitability, impacting their income from block rewards and transaction fees – crucial for confirming transactions and safeguarding the Bitcoin network. Consequently, after a halving event, miners might find it less profitable to operate, potentially leading to a drop in mining activity.

In summary, Bitcoin halving significantly influences the cryptocurrency’s supply dynamics, impacting its price and market sentiment.

3. Meeting held for Bitcoin Mining Facility noise complaints

Noise pollution is something no community wants to deal with but in one area neighborhood, it’s coming from an unusual source a Bitcoin computer mining facility.

A council meeting was held here at the Salem Township administration building Tuesday evening.

Locals gathered to express their concerns about a sound coming from an energy facility in the area.

Salem Township residents filled the seats of their township’s council meeting to voice their concerns about the noise they say is coming out of a local Bitcoin mining facility.

The facility started operating in early 2023. They say you can feel the vibration inside local homes.

“The gentleman that his house is the last house on Confers Lane, you could literally go inside his house, put your hand on the wall, and feel the vibration from the fans. it was that bad,” said Ernest Ashbridge III Vice President of Salem Township Board of Supervisors.

Locals say that their issues stem from these large cylinder buildings behind me, but they say their biggest issue is not what you can see but rather what you can hear.

“It’s terrible. The droning, you can’t sleep at night it wakes you,” says Bodnar.

Stephen Bodnar lives about a mile away from the Bitcoin operation. He says the noise coming from the facility has not only interrupted his sleep schedule but also his daily life.

“I have a little pond in front of my house where I used to sit and have my coffee at. I can’t even enjoy that because I can’t even hear the water over the Bitcoin. It is louder than the waterfall,” explained Bodnar.

Locals say they started noticing the noise and vibration when the operation went online this summer. Talen Energy, who runs the facility, had its director of operations at Tuesday’s meeting. He says they’re working on cutting down the sound.

“We’re trying to do everything we possibly can to cut this down to as low as humanly possible,” said Alex Brammer Director of Operations at Talen Energy.

Studies show the noise comes from exhaust fans inside the building. Talen says it plans to make changes at the source to cut the sound in half something that gives hope to residents who miss their quiet days and nights.

“Well, I’m happy that they’re doing this and they act like they actually care so, the proof is in the package,” added Bodnar.

Talen hopes that the changes they plan to make the buildings quieter will be complete by March of next year.