Sunday, July 14, 2024

US Bitcoin Miners Face Energy Cost Increase Post-Halving

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Energy expenditures for Bitcoin (BTC) miners in the US reached an astonishing $2.7 billion, a figure that is heavily influenced by the recent BTC halving event.

This increase in expense is attributed, as stated in the post by Best Brokers, to the halving process, which cut the reward for mining new Bitcoin blocks in half. As a result, the computational work and energy consumption needed to produce the same amount of cryptocurrency was essentially doubled.

Bitcoin Miners Rethinking Strategies Due to High Energy Costs

Paul Hoffman, an analyst at Best Brokers, brought attention to the fact that Bitcoin mining consumes a significant amount of energy by pointing out that 20,822.62 gigawatt hours of power had been consumed so far in 2018. Because the average commercial power cost in February was $0.1281 per kWh, this level of expenditure is noteworthy.

Furthermore, 116,550 Bitcoins with a total value of $8.2 billion have been mined all over the world. Of these, miners in the United States have contributed 44,102 Bitcoins, which is equivalent to 37.84% of the total. Electricity, which is a significant expense for Bitcoin mining operations, has experienced a significant spike as a result of the rising electricity demand.

Before the halving, the minimum amount of power required to mine one Bitcoin was 407,059.01 kWh, which was equivalent to around $52,144.26. As a result of the halving, the amount of energy required to mine Bitcoin climbed to 862,625.55 kWh, which caused the price of Bitcoin to skyrocket to around $110,503.61. Many miners in the United States have been forced to reevaluate their strategies as a result of the fluctuation in the cost of electricity. Many individuals are opting to relocate to a state that offers lower pricing for electricity or to invest their money in renewable energy sources to save money.

Impact of Bitcoin Halving Event 2024Impact of Bitcoin Halving Event 2024

It is anticipated that Bitcoin mining companies will experience a considerable decrease in annual revenue, which is estimated to be in the billions of dollars, as a direct consequence of the halving event. The American investment banking behemoth JPMorgan Chase & Co. (NYSE: JPM) issued a warning to miners about the rising expenses of production, declining earnings, and power issues before the halving that took place this year.

Giga Energy of Texas, which teamed with companies in Argentina to mine Bitcoin, was one of the mining companies that investigated the possibility of sustainable mining before half of the supply. It is projected that publicly-listed Bitcoin miners will grow their market share as the sector prepares for consolidation. This will be accomplished by taking advantage of better access to finance and equity financing when it becomes available.

The functionality of the Bitcoin blockchain has not been affected in any way as a consequence of the events that have taken place after the halving. On the other hand, as rewards continue to decrease, miners are increasingly resorting to transaction fees as a source of revenue. Every single Bitcoin block would be mined by the time the year 2140 rolled around, and then there would be 64 halving events that would follow. After that, the limit will be set at 21 million.

Although numerous analysts had made forecasts and educated assumptions regarding the price trajectory of Bitcoin before the halving, the price trajectory has remained significantly unchanged. The Chief Executive Officer of Bitwise, Hunter Horsley, for instance, had projected that the digital asset may increase to more than $100,000 after the halving event. Market watchers are forecasting a bullish run in the days ahead, even though it is still too early to say what will happen tomorrow.

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