The rainy season in China has started, and with it the excess demand. But, unlike other years, Bitcoin mining doesn’t seem to be miners’ priority just days away from Halving.
The battlefield is ready for Bitcoin (BTC) to have its Halving. This after the mining activity has completed the 627,000 blocks.
With only 3,000 blocks remaining to be mined, for the arrival of the 2020 Halving that will take place on May 12.
Bitcoin mining in China
The upcoming rainy season brings excessive hydropower, making electricity cheaper and mining more profitable.
Mining facilities in China’s southwest provinces, which are abundant in water during the summer, offer electricity prices up to 20 percent lower, at least compared to last year. This as a regional government plan to attract more crypto investors from Bitcoin mining.
Research firm CoinShares estimated in a report that China accounted for 65 percent of Bitcoin’s Hash Power. Furthermore, he stressed that the southwestern province of Sichuan alone represented more than 50 percent of the total network.
To contextualize, the average cost of electricity last year in China’s Sichuan and Yunnan provinces was around $ 0.035 per kWh. Which makes this region one of the cheapest electricity costs in the world, perfect for large Bitcoin mining farms.
An apparently insignificant difference of even just 0.01 yuan, or $ 0.0014, makes all the difference for Bitcoin mining in China. For a site that has a capacity of 100 MWh, that difference would mean a savings of $ 100,000 per month. Quite significant right?
Everyone get ready
For the mining industry, Halving represents a challenge, since the price of Bitcoin after Halving will determine the two possible destinations of miners: they generate profits or get caught in the disasters of lack of profitability.
Currently, the largest mining manufacturers in China are actively improving production capacity and introducing new ASIC hardware, with better energy efficiency ratios.
Miners are also looking for new mining farms, and old and new companies within the Bitcoin mining space are looking for new opportunities.
“If the price of Bitcoin does not rise after Halving, who will buy new equipment to meet this demand?”, according to Huang Fangyu, co-founder of ValarHash.
But if Bitcoin’s price remains at its current level of $ 7,000 after Halving, older mining equipment is expected to shut down. Which would lead to a decrease in the Hash Power of the network.
Coronavirus no longer appears to be a problem in China
As the Coronavirus outbreak is brought under control, companies in China are gradually returning to work. Participants from the mining industry in China recently said that the impact of the pandemic has gradually weakened.
But as mining facilities struggle to sign customers, others may see opportunities in the second-hand market as older mining equipment is sold at record prices.
“For those who have access to extremely cheap electricity during the summer, they could still accumulate those reserves to earn quick money in the summer and survive Halving.”
The cryptocurrency mining industry is gradually getting back on track. Regardless of whether they are mining equipment manufacturers, mining farm owners or miners, they are all preparing for the battle to come, the Halving of Bitcoin.