Bitcoin’s halving upending global solo-mining profitability

The cost of mining a single Bitcoin has significantly changed since April’s halving, and eight countries with low electricity costs have already imposed bans on BTC mining.

Once a lucrative venture for early adopters, Bitcoin mining has become less profitable following this year’s halving, according to a September report by NFT Evening. For instance, in Ireland, the cost to mine one Bitcoin has surged to around $321,112, while in Iran, it’s only about $1,324. In the U.S., miners reported operating at a 50% loss when Bitcoin’s price fell to $57,909 last month, despite the U.S. being one of the leading Bitcoin mining locations globally.

Bitcoin operates on a proof-of-work consensus model, created by its pseudonymous inventor, Satoshi Nakamoto. This system requires participants to use their computational power to solve complex mathematical problems in order to earn block rewards, which are given in Bitcoin. These rewards allow new coins to enter circulation until the total supply reaches its capped limit of 21 million.

Bitcoin mining profitability in strict regimes

Interestingly, Bitcoin mining remains highly profitable in countries where the cryptocurrency is banned. Over 20 Asian nations, including China, known for its anti-BTC stance, have energy pricing structures that are conducive to Bitcoin mining. Additionally, several African countries, such as Ethiopia, Sudan, and Libya, offer affordable electricity rates, making them attractive for both individual and institutional miners.

Conversely, soaring energy tariffs in some European countries have significantly increased the cost of Bitcoin mining. According to the NFT Evening report, mining a single Bitcoin in Germany or the U.K. could cost up to five times the current market value of the asset.

The halving event, which occurs every four years, has transformed the $2 billion Bitcoin mining industry. Satoshi Nakamoto designed this system to reduce the rate at which new Bitcoins are introduced into circulation. Each halving cuts the rewards for mining Bitcoin blocks in half, meaning miners receive fewer tokens for operating their energy-intensive rigs.

This new era of mining has prompted participants to seek out low-energy countries or face legal repercussions in places like China. Institutional miners have also felt the impact; for example, shortly after the May halving, Bitcoin miner Stronghold considered selling its business as companies adjusted their operations to remain viable. Competing firm Bitfarms even explored plans to acquire Stronghold and enhance its mining capacity.