By
Bena Ilyas
April 25th, 2024
The United States of America and Kazakhstan are amongst the new havens that the majority of Bitcoin miners are exploring.
The Bitcoin and digital currency ecosystem is seeing a unique shift as the once largest mining nation, China has maintained its harsh stance to curb all cryptocurrency transactions. The right authorities to enforce the ban including the financial institutions are playing their part, stirring the migration of Bitcoin (BTC) miners from the Asian giant’s shores.
As observed in the past weeks, some Chinese miners are already selling off their hardware assets, while a host of others are notably looking for new homes or data centers. The United States of America and Kazakhstan are amongst the new havens that the majority of miners are exploring and per a Bloomberg report, data center storage spaces remain one of the major dilemmas of miners.
The Chinese ban has done both harm and good, depending on the side of the divide that you are on. For miners whose machines are already running, the reduction in the number of miners, and the overall computing power flowing into the system has brought down the mining hashrate and reducing the difficulty involved in generating new Bitcoins.
With the known average processing time for BTC transactions pegged at 10 minutes, the hashrate is tilted every other week to help maintain the balance. Per the differentials in the worth of Bitcoin in the year-ago period to date, the same amount of work done can earn a miner as much as three times the value they would have received last year. Today, this has made mining very profitable for miners in general.
However, tapping into this productivity is a hassle, with the bounty for securing allocations in data centers skyrocketing. People are notably willing to pay over the 5 cents per kilowatt-hour premium.
“People are paying an arm and a leg to find hosting right now,” Kaczmarczyk said, talking about Bitcoin miners. “These miners from China are willing to pay 6, 7, 8, 9 cents to get in the game. They’ll pay whatever.”
Bitcoin Ban in China: Mad Rush to Maximize Reducing Hashrate Can Usher a Return to Normalcy
The hashrate or difficulty is plunging as miners are no longer connected online. Those in the US have enough hardware or mining equipment (some shipped there, and a few bought second-hand used) but spaces in data centers as noted are grossly unavailable.
The shortage of materials and the delay in building new data centers are also a common problem that analysts do not believe is likely to be resolved in a few months.
“Machines are no longer the bottleneck,” said Meltem Demirors, chief strategy officer at CoinShares. “Hosting facilities are. You just can’t build a massive co-location data center in a few months.”
However, should the demand to rush back into the mining game by core stakeholders become filled, it is set to eventually help restore normalcy, hence, the difficulty associated with the mining exercise will no longer be as low as it is. The profitability then may be tapered down.
From the current challenge the mining ecosystem is facing, firms like Argo Blockchain PLC (LON: ARB) have secured $20 million which it is looking to build data centers to absorb this demand, a move that is unlikely to materialize in the coming quarters.