Cheap Electricity is the Way Out for Old miners After Bitcoin Halving
Bitcoin halving will happen on May 12 and there are many perceptions and forecasts regarding its effect on the cryptocurrency space. The event will affect miners. According to Johnson Xu, at research company TokenInsight, the event will ultimately eliminate every inefficient miner.
While speaking with Decrypt, Xu noted that finding cheaper electricity is the means of keeping these energy-intensive machines profitable following the event.
The halving event will reduce miners’ profit by fifty percent on Tuesday. That is, the revenue from mining will be cut in half and miners will need to work twice as hard to earn the same amount of Bitcoin. Hence, inefficient miners will be squeezed out of the market as more powerful miners will replace older ones.
However, Xu noted that individuals with older miners can still turn a profit and it is necessary to bring down electricity and operations costs for miners to escape the negative effect of the halving.
Without access to mining machines characterized by greater efficiency, miners need to lower electricity and operations expenses for competition with other miners and to be compensated for the demerits of having outdated hardware, he noted.
Xu mentioned a few ways for miners to reduce electricity costs. Numerous mining farms are established where there is amazingly cheap electricity such as certain regions of China. Certain miners access sub-$0.02/kwh electricity in China but in extremely rare cases.
Likewise, they can save costs by moving Bitcoin miners to colder regions as they save on the energy utilized to cool down miners. Access to cheap electricity will allow miners to keep using outdated hardware when mining Bitcoin.
However, this is only possible when the total network hash rate grows remarkably because of the influx of more powerful computers. Xu said the best approach to prepare for the halving is running the most efficient miners.