one of the biggest bitcoin mining facilityRiot Platforms warned shareholders that there were “no guarantees.” bitcoin halving It will have a positive impact on your profitability.
Approximately every four years, Bitcoin programmatically sets a “halving,” which halves the reward for mining a new block as a way to curb inflation. Bitcoin is set for the next halving one day in april Some speculators think that will happen. raise the price of bitcoin.
But Riot Platforms is warning investors not to get overvalued.
“Bitcoin prices have historically risen around these halving events, but there is no guarantee that price changes will be favorable or compensate for the reduction in mining rewards.” Riot said. 2023 Annual Report.
“Revenue from our Bitcoin mining operations will be reduced,” Riot said, adding, “This could have a material adverse effect on our results of operations and financial condition.”
In order for miners to receive block rewards, they must solve complex cryptographic puzzles that require a lot of power. most persistent criticism of blockchain Proof-of-work consensus mechanism. Cutting it in half is expected to increase electricity demand and, consequently, costs.
“Many miners now find it impossible to remain profitable with current electricity prices,” said Aki Balogh, co-founder and CEO of a Bitcoin smart contract provider. DLC.Linksaid decryption. “A halving essentially doubles the amount of electricity it takes to create the same amount of Bitcoin. The rate stays the same, but miners’ profitability is cut in half.”
As a result, miners are worried about their profit margins. Experts are particularly worried about downstream miners using inefficient machines.
“Efficient operation, i.e. low energy costs and the latest generation of miners ASIC— It will continue to operate even while previous generations of ASICs are unprofitable and shut down for economic reasons.” Matthew Niemerg, Co-Founder, Layer 1 Blockchain Network Aleph Zerosaid decryption.
“How do we prepare? Be prepared to close down unprofitable machines,” he added.
from last half life May 2020 saw more miners enter the space, leading to an increase in hashrate (a measure of the amount of computer power mining at any given time).
“Increasing competition in the miner space has led to a more than fivefold increase in hashrate since the last halving,” said Greg Beard, CEO and Chairman. Stronghold Digital Miningsaid decryption. “So while everyone is excited about the halving, we have already seen a quarter of a mining economy as the Bitcoin price fails to keep pace and miners add capacity to their machines.”
This means that mining efficiency is now more of a priority than ever before.
“The halving will most benefit miners with lower power costs,” Beard explained. “Miners who can keep costs low are the miners who can win the halving as the price of Bitcoin rises.”
Despite experts predicting that the least efficient miners may have to shut down operations, Riot Platforms predicts that global hashrate will continue to rise.
“With this increase in demand, we expect the demand for new Bitcoin to grow similarly as more mining companies join the industry,” Riot’s report states. “Therefore, the global network hashrate will continue to increase as new and existing miners deploy additional hashrate. This means that miners’ share of the global network hashrate (and therefore their likelihood of earning Bitcoin rewards) will decrease. no see.”
As miners look for more efficient options, the industry can accelerate the transition to this approach. renewable energy Lowering energy costs or spurring innovation for new low-cost mining machines.
Editor: Andrew Hayward
