Bitcoin mining company Hive Digital revealed yesterday that it has purchased a stockpile of 4,800 Antminer s19K Pro machines from supplier Bitmain in preparation for the cryptocurrency’s next halving that will take place in April 2024.
The machines have a computing power of 120 TH/s and an efficiency of 23 J/T.
This move, contextualized by Hive’s purchases over the past 6 months, highlights the mining company’s confidence in the digital currency sector, especially in what concerns Bitcoin’s price action between now and the coming months.
Halving will reduce the issuance of BTC by 50% for every block resolved by miners, hence those who are shopping at this time basically believe that the coin’s price growth will be able to make up for this gap.
As well as Hive, there are other leading mining companies that are investing heavily in the medium-term future of the cryptocurrency industry.
See all the details below.
Hive Digital buys 4,800 Bitcoin mining machines ahead of 2024 halving
Hive Digital, a Vancouver-based, Nasdaq-listed Bitcoin mining company, announced Tuesday that it has finalized an agreement with supplier Bitmain to purchase 4,800 Antminer s19k Pro machines as a preparatory measure for the upcoming crypto halving.
The machines, which feature an air-cooling system and a SHA256 algorithm, have a hashrate capacity of 120 TH/s and an efficiency of about 23 J/T.
They will be delivered as agreements within 30 days and will be implemented as of now in Hive’s supply to improve the company’s extraction performance.
Specifically, the strategy of the well-known Canadian company is to upgrade its older 38 J/T machines by improving their efficiency to 23 J/T.
In a press release, executives of the mining group reportedly stated:
“Our strategy is to maximize the cash flow return on investment for Bitcoin ASICs, so our goal is to make investments that increase our shareholders.”
According to data reported by “theminermag.com,” Hive is one of the Bitcoin mining entities with the highest operating costs for running the business, with an average of $22,000 in expenses per BTC mined, up 21.2% in the third quarter.
The decision to bolster its machine stock and focus on improving energy efficiency at this precise moment in history speaks volumes about Hive’s hunch about Bitcoin’s price performance in the coming months.
The company has purchased a total of 8,900 state-of-the-art ASICs in the past 6 months, including 3,100 units of the S19XP and 5,800 units of the S19k Pro.
Counting purchases since November 2022 by Hive ( the month in which Bitcoin hit the bottom of the last bear market) we arrive at the incredible figure of 29,000 ASIC machines.
With the advent of the coin’s 4th halving, expected in April 2024, miners will see their profits from mining a block ( not counting tx fees) substantially halved from 6.25 BTC to 3.125 BTC.
Choosing to position now by buying a batch of Antminer, means being essentially bullish on Bitcoin’s medium-term forecast.
The coin in the past 30 days has seen a 27% increase in its value from $27,800 to the current $35,600, showing that it is serious about the next bull run.
The HIVE share price, on the other hand, unlike BTC, has lost about 50% of its value since July, and is currently registering one of its lowest values ever in the past 3 years.
If the king of the crypto market were to break previous all-time highs in the halving year, HIVE’s reported earnings would likely be such that the stock price would rise again.
Bullish forecast for BTC from mining companies.
Mining companies are bullish on the price of Bitcoin between now and the next few months, confident that halving could create supply shortages in the markets and indirectly bring them higher earnings than they currently have.
For Hive in particular, the total hasharate controlled by the company is about 4.1 exahash per second (EH/s), equivalent to 1% of the total hashrate of the Bitcoin network.
The company mines about 9 BTC per day, and with the anticipated arrival of the new S19k Pro units, its hashrate is expected to increase further.
Other groups involved in virtual satoshi mining have bolstered their batches by increasing the number of ASIC machines they operate.
In October, Marathon Digital, Core Scientific and Clean Spark individually earned more than 600 BTC, or $21.3 million according to current market values.
The share of Bitcoin mined by these companies will shrink significantly from April 2024, when the 4th halving of mining rewards for the Bitcoin network takes effect, but the growth in the value of the coin could make up for this shortfall.
Usually after each halving the price of Bitcoin explodes to the upside going on to punctually mark new all-time highs, which give miners a boost in profits while keeping in mind the reduction of the so-called “block reward.”
In order to get a better understanding of the extent to which mining companies are bullish on the value of BTC, let’s go into the details of this world’s profitability calculations.
According to data offered by “The Block,” miners currently earn about $0.08 per day for each Terahash per second (TH/s) offered to the network. Of this 8 cents, about 2% refers to tx fees paid by users while most of the income comes from block reward.
A 120 Th/s Antminers s19k Pro (a model recently purchased by Hive) consumes about $2,000 per year in power according to data released by Hive.
With the next halving of Bitcoin expected in April, if the price of the coin were to remain unchanged, the average revenue per TH/s will inevitably have to drop to $0.04.
Hence, Hive, taking into account today’s market value of the cryptocurrency, will spend more in operating costs as a result of halving than the revenue brought in by BTC mining (about $1,700)
From these calculations we can well understand that Hive and other mining companies firmly believe that the value of Bitcoin will increase substantially closer to the halving, considering that if this were not to happen they would be mining at a loss of about $300 per year per piece of hardware.
Of course, these calculations do not take into account the variability of the “difficulty adjustment” metric and as mentioned take the current price of BTC as an example.
The results are approximate and serve solely to give an idea of how optimistic mining companies are about the future of the market’s first cryptocurrency.