Bitcoin Halving Enters Countdown!
Bitcoin’s total circulation was set at 21 million coins when the first Bitcoin was issued. The “halving” is an important element designed to control the speed of Bitcoin circulation. In the Bitcoin network, a new block is generated every ten minutes through the process of “mining”. Bitcoin halving will make Bitcoin mining supply scarce, so it is usually considered a bullish event. What exactly is the process of “mining”? Will the mining industry continue to exist in the background of Bitcoin halving?
Anyone can become a miner, but individual computing power is too low.
Bitcoin “mining” can be understood as miners using mining machines to help the Bitcoin network keep records and receive Bitcoin (BTC) rewards. “Miners” are people who own mining machines and work for the Bitcoin network, while “mining machines” refer to the tools used to work for the Bitcoin network, such as computers.
If we look at the principle of Bitcoin “mining”, in the early days when the overall network computing power was low, anyone could indeed become a miner. Individuals using computers could mine more Bitcoin, and the difficulty was not high, which can be understood as free mining. However, in recent years, mining machines have been iterated and updated very quickly, and the computing power of new mining machines is very high. Therefore, if individuals purchase old mining machines with low computing power, it will seriously affect their profits. If they buy large mining machines and do not join mining pools, the computing power of individual mining machines is relatively insignificant compared to large mining pools, and the probability of mining Bitcoin is extremely low. Even if they mine Bitcoin, their earnings cannot offset the mining costs, including mining machines, electricity fees, operation and maintenance fees, etc. Currently, Bitcoin mining is showing a trend of professionalization and industrialization, gradually being dominated by institutions or enterprises.
Where will Bitcoin miners go?
China’s Bitcoin mining production once accounted for two-thirds of the global total. From September 2019 to April 2020, the network total computing power of Chinese miners accounted for more than 71%.
Due to concerns about related financial risks and excessive energy consumption, China began to rectify the situation in 2021.
Bitcoin miners have started to look for suitable footholds globally and have shifted their operations to places with low electricity costs and friendly policies, such as the United States, Canada, Iran, Kazakhstan, Russia, and northern Sweden. (The picture shows the mining farm in Kazakhstan)
Texas in the United States took the lead in accepting cryptocurrency businesses. (The picture shows the mining farm in Texas)
However, after Bitcoin mining farms operated by Chinese people were exposed in the media, they had to look for new places and turned their attention to Ethiopia, where electricity costs are low and the policies are friendly.
The great migration of Bitcoin miners: From Texas, USA to Ethiopia
In fact, China’s Bitcoin mining production once accounted for two-thirds of the global total. From September 2019 to April 2020, the network total computing power of Chinese miners accounted for more than 71%. As a power-consuming industry, China’s abundant and inexpensive electricity and hardware made it a hot destination for cryptocurrency companies.
Previously, Bitcoin mining was mainly concentrated in provinces with abundant and cheap electricity resources, including Sichuan Province, Inner Mongolia Autonomous Region, Xinjiang Uygur Autonomous Region, and Yunnan Province. However, due to concerns about related financial risks and excessive energy consumption, China began to rectify the situation in 2021, causing Bitcoin miners to look for suitable footholds globally and shift their operations to the United States, Canada, Iran, Kazakhstan, Russia, and northern Sweden.
In the United States, Texas was the first to accept cryptocurrency businesses, and the governor of the state hopes that Texas will become the new global Bitcoin mining center. Bit Mining, headquartered in Shenzhen, has also invested $26 million in a 57-megawatt facility in the state. According to The New York Times, Chinese-owned or operated Bitcoin mining farms have been discovered in at least 12 states in the United States, including Arkansas, Ohio, Oklahoma, Tennessee, Texas, and Wyoming, consuming energy equivalent to the electricity consumption of 1.5 million households.
However, after Bitcoin mining farms operated by Chinese people were exposed in the media, they had to look for new places and turned their attention to Ethiopia, where electricity costs are low and the policies are friendly. Cryptocurrency mining service provider Luxor Technology estimates that Ethiopia has become one of the largest recipients of Bitcoin mining machines globally. The Ethiopian Electric Power Company stated that it has reached power supply agreements with 21 Bitcoin miners, 19 of which are from China. Therefore, Ethiopia will become one of the most popular destinations for Chinese miners.
