The Bitcoin halving is just weeks away — here’s how miners have prepared

Mining companies are bracing themselves for the Bitcoin halving — a time expected to weed out the segment’s less efficient operators, and those with trouble accessing capital.

Per-block mining rewards are set to drop from 6.25 bitcoin (BTC) to 3.125 BTC on or around April 20. Such an event occurs roughly every four years.

While some industry players are expected to struggle, other firms have made it clear they intend to take advantage of buying opportunities and set themselves up for future growth.

Such vision takes preparation, and miner moves have been aplenty in recent months.

While some miners have already started acquiring properties, others have focused on buying new and more efficient machines. Cutting costs and diversifying revenue sources has been another strategy used by various companies.

Let’s take a deeper look.

Acquiring sites

While a bunch of the larger mining companies have signaled the intent to be opportunistic in a post-halving world, some have already started to buy properties.

Compass Point research and trading analyst Joe Flynn has referred to Marathon Digital as “the 800-pound gorilla” in the mining space. Indeed, the company sported an energized hash rate of 28.7 exahashes per second (EH/s) as of Feb. 29, and has no plans to slow down.

The company closed its acquisition of two mining facilities in Texas and Nebraska in January. Marathon more recently revealed its intent to buy a Texas bitcoin mining facility owned by Applied Digital for roughly $87 million.

CleanSpark has also bought facilities this year — completing its acquisition of three data centers in Mississippi last month.

The purchases — as part of a $19.8 million cash deal — were set to expand CleanSpark’s operating hash rate by 2.4 EH/s.

Bitfarms bought land in Yguazu, Paraguay in January for a planned 100 megawatt (MW) facility. Near the Itaipú Dam, the facility — to boost Bitfarms’ portfolio of “low-cost renewable hydropower” — is set to be completed in the second half of 2024, the company said at the time.

Refreshing machine fleets

Buying mining machines was a trend in 2023, as a dozen or so public mining companies committed more than $1 billion in purchase orders, according to BlocksBridge Consulting data.

Among the larger purchases was Riot Platforms’ buy of 66,560 MicroBT machines for $290.5 million in December — amounting to 18 EH/s of mining capacity.

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Riot then bought 31,500 more miners from MicroBT last month, for $97.4 million. About 17,000 of those machines were set to replace “under-performing” miners in its Rockdale, TX facility, Riot CEO Jason Les said at the time.

Others have followed suit with acquiring and deploying new machines that improve the company’s mining efficiency.

Bitfarms revealed in November it had ordered 35,888 Bitmain T21 miners as part of a so-called “transformative fleet upgrade” — with deliveries slated between March and May.

The company then agreed to buy nearly 52,000 more machines earlier this month.

“Securing these miners now is a key part of our strategy to drive rapid and meaningful improvements across our three key operating metrics of hashrate, energy efficiency and operating costs per terahash with a plan to capture greater upside from rising bitcoin prices with rapidly expanding mining margins,” Bitfarms CEO Geoff Morphy said in a statement.

The latest Bitfarms purchase came just days after the company said it planned to sell common shares of the company to gain proceeds of up to $375 million.

Bitmain agreed to invest $53 million in Core Scientific in September ahead of Core’s emergence out of bankruptcy in January. That Bitmain deal was set to supply the mining company with 27,000 Bitmain S19J bitcoin mining servers — totaling 4.1 EH/s of hash rate.

Core Scientific said earlier this month that it completed the payments due in 2024 for its S19J and S21 machines.

CleanSpark bought 4.4 EH/s worth of Antminer machines in October, while New York-based Cipher Mining purchased 16,700 Avalon A1466 miners from Canaan in January.

Most recently, Singapore-headquartered Bitdeer said Tuesday it was set to install new SEALMINER A1 miners as part of an initial 3.4 EH/s expansion in Texas and Norway. The company said it would be retiring older mining rigs as part of the upgrade.

Cost-cutting and diversifying revenues

While growth is critical, not all miners are seeking to expand at all costs. Just ask Hut 8.

The company merged with US Bitcoin Corp. in November. It then named US Bitcoin Corp. co-founder Asher Genoot as Hut 8’s new CEO, replacing Jaime Leverton.

Hut 8 said earlier this month it would cease mining operations at its Drumheller site in Alberta, Canada as part of a larger effort to cut inefficiencies.

“I’m going through not just every single facility, every single category of miners and every single business line, but also every single cost center,” Genoot previously told Blockworks.

Diversifying revenue streams, as well as exploring new geographies, has also been a focus for some segment players.

Miners have increasingly looked to support the high-performance computing (HPC) and AI sectors.

Hive Digital Technologies rebranded last July as part of a pivot to HPC, while Hut 8 has said it also plans to boost its footprint in the growing AI infrastructure and computing markets in the coming years.

Earlier this month, Core Scientific said it would lease up to 16 MW of capacity in its Austin data center to cloud provider CoreWeave. Possible revenue via the CoreWeave deal exceeds $100 million, the company said.

Geographic diversity is also a way some miners have looked to gain an edge.

Marathon Digital expanded into Abu Dhabi and Paraguay last year — and signaled it is looking into Africa as another possible spot to set up operations.

Charlie Schumacher, Marathon’s vice president of corporate communications, previously told Blockworks that expanding into new regions can help improve margins and reduce concentration risk in the business.

Looking ahead

The big public miners have noted that building up balance sheet strength has been crucial as executives expect there to be more buying opportunities post-halving.

Ultimately, segment observers note that bitcoin miner consolidation appears imminent.

Marathon executives said during a February earnings call they would look to use the firm’s balance sheet — with roughly $1 billion worth of unrestricted cash and bitcoin, as of Jan. 31 — to nearly double the firm’s hash rate to 50 EH/s by the end of 2025.

Riot Platforms ended 2023 with $597 million in cash on its balance sheet, and held 8,067 BTC at the end of February — worth roughly $550 million.

The company intends to use that capital to help it reach 38 EH/s by the end of 2025, Riot executives note.

Core Scientific CEO Adam Sullivan told Blockworks that the company is set to focus on opportunistically buying machines from struggling miners unable to afford parts of their existing orders after the halving.

While Hut 8’s Genoot said the firm will look to invest in growth going forward, its decision to build scale or buy scale will depend in part on cost.

The company’s recently announced 63 MW build-out in Texas was expected to cost $275,000 per megawatt — roughly 40% less than the roughly $460,000 per megawatt that Marathon spent on two mining facilities in December.

“We’re very active in the M&A markets, but we’re also very cost-conscious,” Genoot said previously. “We’re not going to overpay because we know what the cost is to develop ourselves as well, so we’re running both in parallel very aggressively.”

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