Bitcoin halving is expected to arrive in April 2024. Hashrate Index released a mining report pointing out that mining computing power has hit a record high. After the halving, Bitcoin must rise to $50,000 for miners to continue to make profits. North American listed mining company Hive Blockchain announced on Wednesday (July 12) that it would change its name to HIVE Digital Technologies and will focus on providing artificial intelligence (AI) computing power services in the future, proving that the track is changing rapidly.
Jaran Mellerud, a cryptocurrency mining analyst at Hashrate Index, predicts that nearly 50% of Bitcoin miners will suffer losses in the next halving due to low mining efficiency and high costs. The break-even electricity price for the most common mining machines is expected to drop from 12 cents/kWh to 6 cents after the halving, and currently about 40% of miners still have operating costs per kilowatt-hour higher than this.
Miners with operating costs above 8 cents will find it difficult to make a living, as will small miners who do not operate their own mining machines but outsource them.
Wolfie Zhu, director of TheMinerMag, a research institute under BlocksBridge, added that, taking all factors into consideration, the total cost of some miners is far higher than the price of Bitcoin. For many miners with low operating efficiency, net profit will become negative.
He estimated that the cost for listed mining companies to mine each bitcoin is $10,000-15,000. Once the halving occurs, the cost will double and the break-even point will reach $20,000-30,000.
Kevin Zhang, senior vice president of mining strategy at Foundry, a cryptocurrency mining company under DCG, said that in order for miners to maintain the same profit margin after the halving, the price of Bitcoin must rise to $50,000-60,000 next year.
At present, it is increasingly difficult to survive in the Bitcoin mining industry. In addition to significantly rising electricity costs and increasingly heavy debt financing burdens, the increasingly fierce competition among Bitcoin miners has also compressed profit margins.
The Hashrate Index mining report shows that Bitcoin's 7-day average computing power hit a record high of 401EH/s over the weekend. The 7-day average rose 8.5% week-on-week to 398EH/s, and the 3-day average rose 18% to 444EH/s.
Since mid-June, in response to a heat wave that caused electricity prices to soar, Bitcoin miners in Texas, the second largest state in the United States, restricted their operations, resulting in a decline in Bitcoin computing power. However, after entering July, the computing power has returned explosively.
The report predicts that the computing power growth rate will be very large in the next difficulty adjustment, and it is likely to soar by more than 7.5% again. Hashprice, which is often used to measure miners' income, is affected by factors such as Bitcoin price, Bitcoin block rewards, mining pool fees, etc. It may fall below $70/PH/day in the next difficulty adjustment.
In terms of mining difficulty, BTC.com data shows that the next difficulty will increase by 4.93% to 53.14T, breaking the historical high of 52.35T on June 14. According to f2pool data, at $0.1 per kWh, only 13 mining machines have not reached the shutdown price. The Ant S19 XP model has a daily net profit of about $3.1. Based on the S19 XP market price of $4,653, it will take more than 4 years to get back the investment if you enter the market now.
The increase in Bitcoin mining difficulty and the subsequent halving of block rewards will be a severe blow to all Bitcoin miners. Large miners are also operating by obtaining pricing from electricity suppliers in advance, increasing funds and cutting investments. Tiffany Wang, CEO of Texas-based Bitcoin miner Lotta Yotta, predicts that many miners will be driven out of the market during the halving event.
Hive Blockchain, a large mining company in North America, issued a press release on Wednesday saying it will launch a new name, HIVE Digital Technologies, and remove Blockchain from its original name, thus starting a new strategic expansion, targeting this year's hot global AI track.
The press release stated that Hive Blockchain has been involved in the Bitcoin mining industry since 2017 and will not stop its Bitcoin mining business at present. It is just a strategic shift at this stage. They believe that AI training from ChatGPT to Midjourney requires high-end GPU computing. As global companies adapt to the AI world, they will also begin to seek to develop their own AI tools to gain a competitive advantage.
HIVE Digital Technologies' main plan for the future is to use a collection of 38,000 Nvidia GPUs for large-scale computing tasks. In addition, it also plans to launch a new cloud computing service HIVE Cloud by renting out a collection of GPU servers. HIVE Cloud aims to provide a more cost-effective option for small and medium-sized enterprises.
HIVE said that a batch of servers they cooperated with SuperMicro are expected to arrive in August, and there will be more delivery news in the future. Frank Holmes, the company's CEO, said: "The AI chatbot ChatGPT is one of the fastest growing technology products in history. We believe that its underlying technology, namely large language models (LLMs), has attracted 100 million users in two months, which has shown a high degree of disruptiveness."
“Both training and fine-tuning of these LLMs rely on GPUs, and we believe GPU computing via our Nvidia GPU cards is a high-margin business that could exceed $100 million in annual revenue.”
