It's been months since the much-anticipated fourth Bitcoin halving event in April 2024, and miners are still adjusting to the lower block rewards. Before the halving event, bitcoin miners were awarded approximately 900 daily units. Today, this number has decreased to 450 new units generated and awarded to bitcoin miners.
On the other hand, if previous halving events are anything to go by, the price of Bitcoin significantly appreciates after halving events. That said, this hasn't been the case so far. Before the April halving, BTC was trading at $67,000. Since then, the price has bounced around the $63,000 mark, indicating a delayed price appreciation.
So, is it still profitable to mine Bitcoin despite its relatively low price? In this piece, we highlight the impact of the halving and what the future holds for Bitcoin miners.
Post-halving mining developments so far
As expected, Bitcoin production has decreased since April due to reduced rewards. After halving, the reward dropped to 3.125 BTC per block. The drop in BTC production was expected as miners try to realign their mining operations with BTC market economics. For instance, reports in May indicated that major mining companies such as Bitdeer saw their Bitcoin supply drop by about 31% compared to before the halving event. Others, like Bitfarms and Terawulf, had significant drops, hitting 42% and 44%, respectively.
Here are some of the developments so far as miners respond to the stagnant prices.
Mining firms merging to stay afloat
Mergers and Acquisitions (M&As) have been the order of the day as the mining space consolidates. This is no surprise since generating new tokens is now much less profitable—the block reward halving cut industry revenue by half. Market analysts claim that most mining companies are currently exploring exit strategies.
Some of the major M&As news included:
Riot Platforms was looking to acquire Bitfarms in April. Bitfarm's board of directors rebuffed the initial unsolicited $950m offer, which involved acquiring Bitfarm at a $2.30 per share offer. However, Riot Platforms went ahead and acquired 12% before increasing the stake to about 19.9%. Both companies recently entered a settlement agreement that saw Army Freedman join Bitfarm's board.
That said, Bitfarm has also been upgrading its mining fleet. It doubled its Yguazu's site capacity to 200 MW after securing an additional 100 MW of power from Paraguay's state-owned utility, ANDE.
Bitdeer's $150 million private placement deal with Tether. In May, Bitdeer Technologies Group (BTDR) entered into an agreement with Tether Limited that saw the private placement of Bitdeer's Class A shares. The agreement helped Bitdeer generate over $100 million in gross proceeds. Besides, Tether could provide an additional $50 million if they exercise the stipulated share purchase warrant within the next 12 months. The revenue should help Bitdeer develop its ASIC-based mining rig. Bitdeer also made strategic moves in June, launching their AI cloud service and agreeing to acquire FreeChain, an ASIC design company.
CoreWeave made an all-cash offer to acquire Core Scientific in June. However, the unsolicited $1.02 billion offer from CoreWeave, an AI hyperscaler and cloud computing company, was rejected. That said, the two companies signed a series of 12-year contracts that involved Core Scientific providing CoreWeave with 200 MW of infrastructure.
Soluna Holdings (SLNH), a developer of green data centers for Bitcoin mining, also secured a partnership with Spring Lane Capital (SLC) in May. The $30 million financing round facilitated Soluna's 48MW expansion of Project Dorothy, its flagship data center facility.
Bitcoin mining companies shifting focus to AI
Just like blockchain tech has revolutionized multiple industries, AI looks to do the same. For instance, generative AI is transforming healthcare. At the same time, Predictive AI is already being used in online casino slot machines – you can check out more news on how AI impacts the gambling sector on Casino guru news. Even better, AI might now be about to transform the Bitcoin mining sector.
Over the past few months, multiple crypto companies have ventured into AI as miners diversify their revenues. Fortunately for miners, their mining rigs are exactly what's needed for AI's data-intensive operations. As stated earlier, Bitcoin miners such as Core Scientific have completed deals with CoreWeave, a provider of chips for running AI models.
Some of the major deals involving AI investments so far include:
In June, Miami-based Bitcoin mining group Hut 8 announced a $150 million investment from Coatue LLC. This strategic investment allows Hut 8 to upgrade its existing data centers into next-gen AI infrastructure. The company has already purchased over 1,000 Nvidia GPUs. Besides, they have finalized commercial agreements, which allow the group to create a new AI vertical that offers a GPU-as-a-service model.
Bit Digital is another miner that has ventured into AI. In June, the New York-based company reported that it had entered an agreement to supply 2,048 GPUs to an unnamed customer. The agreement will generate a total revenue of approximately $275 million.
We are likely to see more mergers and acquisitions activity as miners look to improve tier computing infrastructure and operational efficiency. The divergence into AI will also be a major development in the crypto world.
