Using Cheap Power Could Be a Temporary Solution to Those with Older Generation Mining Rigs

Since the Bitcoin halving event, most small miners have capitulated. One way they could squeeze some life out of their outdated miners is by reducing the cost of power. To remain profitable, they will have to work hard and find cheap sources of power.

Surviving the Halving

The halving event made older miners inefficient and economically unviable. However, a good way to keep them mining profitably would be to get cheap power. After the halving, the mining rewards fell by half. It effectively cut mining revenue for all miners in half. It means each mining rig would need to work twice as hard to earn the same income they were before the halving. Most powerful mining farms are dealing with the issue by buying the latest BTC miners.

The result is that most other miners will be squeezed out of the market. To deal with the issue, older miners should look to keep their operating costs and their power costs low. It will allow them to compete with newer mining rigs and compensate for the downside of owning an old device.

How to Cut the Cost of Power

One way to cut the cost of power is to move the rigs to areas with low power costs. For instance, there are places in China where the cost of power is $0.02/kwh or lower. However, this type of power is quite rare. Another solution is to move the mining rigs to cold regions. In cold regions, the mining rigs use less energy to cool down. As a result, it boosts their income.

A Temporary Solution

Miners with access to cheap power will have an advantage over other times. For now, they will continue mining BTC and making a profit with old mining rigs. However, this is only temporary. As the network hashrate rises, the economics of using old miners will not be profitable. The increase in hashrate will be caused by an influx of new and power mining rigs.

Currently, most mining firms have placed orders for these powerful rigs. They are going to receive them in the next two to three months. By the end of 2020, the hashrate should have risen significantly. Eventually, all old miners will be pushed out.

For everyone else who cannot cut costs or reduce the cost of power, the only solution will be to throw money at the issue. It will entail making an investment in the most efficient miners and holding on until you break even. The recent halving should serve as an important lesson for the next four years when the next halving is expected to occur. Small miners who intend to be in the mining sector for many years should put away some funds that they can use to upgrade their mining rigs once the halving occurs.

Another option, which has yet to be widely tested, is co-location. It entails sending mining rigs to a co-location center. The center mines BTC for you and sends you the profit. They charge a small fee and manage all your mining rigs. However, it is still a new concept that has not gained widespread adoption in the crypto world.