Russian bitcoin miners represent 12% of the global hashrate and are on track to double their Chinese counterparts.
New exodus of miners after the halving?
With the reward per block going from 6,250 to 3,125 bitcoins, the halving will cut miners’ margins in half. Those using older ASIC models will have to unplug everything.
Indeed, at the end of 2023, eight relatively new ASIC ASIC models were responsible for more than 70% of the hashrate. This is what we can read in the last Galaxy Digital report which cites data from Coin Metrics.
The analysis suggests that 15 to 20% of the hashrate (86-115 EH/s) comes from old models which will no longer be profitable post halving. The CEO of Cleanspark anticipates a collapse of 30%. Almost all older models like Bitmain’s S9 and MicroBT’s M32 will be out of the running.
Unless you benefit from almost free electricity, only recent ASICs like the Antminers S19 and S21 will remain profitable. This generation of ASICs represented more than half of the hashrate at the end of 2023.
The report, however, predicts that some of the less efficient ASICs will move to regions that are more lenient in terms of energy prices. It is currently in the Middle East, South America, Bhutan and Russia that growth is becoming increasingly strong.
So much so that despite the decommissioning of numerous ASICs, Galaxy Digital still saw the hashrate reach 700 EH/s at the end of the year. We are currently around 535 EH/s. Potentially an increase of 30%, a good portion of which will come from Russia.
The Siberian bitcoin industry
Analyst Jaran Mellerud estimates that 40% of hashrate comes from the United States, 15% from China and 12% from Russia.
These figures are approximate, but probably accurate. In Russia, the Bitriver miner is one of the world giants with 15 sites comprising more than 175,000 ASICs and consuming more than 520 megawatts. Knowing that each site can provide more than one gigawatt of electricity…
The Russian miner will inaugurate a new 100 MW site before June. Located in the Far East of the state of Buryatia, near Lake Baikal, the complex will accommodate 120 technicians who will manage more than 30,000 ASICs.
And like Texas, which is pulling out all the stops to attract miners, the KRDV (Russian Corporation for the Development of the Far East and the Arctic) has made things easier.
“Bitriver benefits from a lot of support from the government. No property tax. No property tax. Insurance premiums reduced to 7.6% and reduced income tax rate »has declared Dmitry Khameruev, director of KRDV in Buryatia.
“After connecting the Bitriver installation to the national electricity grid, the electricity tariff will be reduced by half for citizens”he added.
A little over a year ago, B2G director of Bitriver Oleg Ogienko explained that Russian miners were already consuming 1.7 GigaWatt. “ Given the growth potential, we will reach 5 GW before 2025. Russia will then be in second place in the world”he announced.
Knowing that Texan miners consume 2 GW and that we are around 18 GW globally.
The race for efficiency
The expansion of the bitcoin industry in Russia is observed through the hashrate. The latter soared by 104% in 2023 after increases of 46%, 30% and 35% in 2022, 2021 and 2020.
Public miners (mainly American) purchased over 94 EH/s worth of ASICs worth $1.5 billion last year. Spending has already reached nearly $400 million since the start of the year.
These purchases mainly include latest generation ASICs with efficiencies below 20 J/TH. This is the case of the S21/T21 from Bitmain and the M66/M56 from MicroBT.
As such, the Galaxy Digital report provides very interesting tables to guess at a glance whether it is interesting to mine near you.
The table below shows the minimum electricity cost threshold (dollars per megaWh) based on different combinations of efficiency and hashprice.
The hashprice corresponds to what the production of one TH/s brings in each day (in dollars). It is currently at $0.083 and will fall to around $0.045 after the halving. An S19j Pro miner (30 J/TH) will then need a KWh of less than $0.063 to achieve a positive gross margin.
Miners like S19 or an M30S (~25 J/TH) will need a KWh of less than $0.054. Conversely, the S21 (17.5 J/TH) will remain afloat below $0.095. It’s $0.08 for the S19 XP (21 D/TH).
Suffice to say that mining in France with the EDF rate (0.20 € per KWh) will unfortunately no longer be an option. Even when practicing overclocking with an S21 in immersion.
Unless maybe the hashrate stabilizes and bitcoin climbs above $100,000…
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