According to Bloomberg, about 6,000 outdated Bitcoin mining equipment in the US are about to be decommissioned and sent to a warehouse in Colorado Springs. These machines will be refurbished and resold to overseas buyers who seek to mine profitably in low-cost environments.
The “halving” event in late April will reduce miners’ main source of income – mining rewards. Miners will try to mitigate the impact by upgrading to the latest and most efficient technology. Since electricity costs are the biggest expense, publicly listed mining companies, including Marathon and Riot Platforms, need to reduce their operating costs to maintain profitability. Their outdated mining machines may still be profitable, but the likelihood of profitability in the US is low.
According to Ethan Vera, COO of Seattle-based crypto mining service and logistics provider Luxor Technology, an estimated 600,000 S19 series mining machines (the majority of currently used machines) are being moved out of the US in large quantities, mainly to Africa and South America.
Jaran Mellerud, CEO of Hashlabs Mining, stated that although operating S19 series and similar mining machines in the US may not be profitable after the halving, if hosted in certain regions in Africa, these machines can still generate substantial profits and extend their lifespan.
According to CoinMarketCap data, as of the time of this article’s publication, there are only 26 days left until the Bitcoin mining reward halving.
Price Decline
Lauren Lin, Director of Business Development at Luxor, stated that some buyers are planning to purchase old mining machines after the halving, as they believe prices will further decline at that time. According to Luxor, in March 2022, the price of a second-hand S19 series mining machine was around $7,030. One year later, with the decline in Bitcoin’s price, the price of the equipment sharply dropped to around $900, and this month it has dropped to about $427. It is estimated that after the halving, the price in May will be around $356.
In the US, some miners choose not to sell their old machines but instead move them to areas with lower electricity costs and third-party data centers. Nuo Xu, who owns two mining farms in Texas, will go to Ethiopia, Nigeria, and several other countries this month to find suitable locations for approximately 6,000 old mining machines.
He said, “There is greater risk for my machines in Africa, but I have to move them there. Cheaper electricity outside the US means a shorter time to recover the indirect costs.” Additionally, labor and construction material costs are much lower.
Related Report: “Cantor Fitzgerald Report: 11 Listed Mining Companies May Struggle to Profit from Mining Business After Bitcoin Halving.”
