Bitcoin’s halving upending global solo-mining profitability

The cost of mining a Bitcoin changed drastically following the halving in April; Eight countries with affordable electricity have already banned BTC mining.

Bitcoin (BTC) mining was once a cash cow for early adopters, but hasn’t been since the halving earlier this year, according to a September study by NFT Evening.

For example, people in Ireland have to spend approximately $321,112 to mine a single Bitcoin. In Iran, the same transaction costs approximately $1,324. Due to energy costs, US miners operated at a 50% loss when Bitcoin dropped to $57,909 last month. This paradigm has persisted despite America being one of the largest BTC mining centers in the world.

BTC was built on the proof-of-work consensus model of its pseudonymous creator, Satoshi Nakamoto. This blockchain design means that network participants must use computing power to solve complex mathematical problems and earn block rewards.

Block rewards are determined in Bitcoin, and new tokens are allowed into circulation until BTC’s fixed supply of 21 million is reached.

Global BTC mining energy cost after halving | Source: NFT Evening Profitability of Bitcoin mining in strict regimes

Coincidentally, Bitcoin mining is quite profitable in countries where the cryptocurrency is banned. More than 20 Asian countries, including China, an anti-BTC country, have energy pricing systems suitable for Bitcoin mining. Five African countries also offer cheaper energy packages, making countries such as Ethiopia, Sudan and Libya target countries for Solo and corporate miners.

Meanwhile, high energy tariffs have rattled some European countries and raised the barrier to entry for BTC mining. The NFT Evening report said that mining one BTC in Germany or the UK could cost five times the spot value of the asset.

The halving, which happens every four years, has transformed the $2 billion Bitcoin mining business. Nakamoto designed the system to make it difficult for new Bitcoin to enter circulation. Every four years, the rewards for mining each BTC block are halved, and miners receive fewer tokens to run energy-intensive computer hardware.

The new mining era has encouraged participants to seek out low-energy countries or risk legal condemnation in countries such as China, according to the report.

However, even corporate miners could not escape this change. In May, weeks after the halving, Bitcoin miner Stronghold explored selling its business as businesses adjusted their operations to stay afloat. Rival company Bitfarms is reportedly making plans to acquire Stronghold and combine its mining capacity.