Cryptoverse: Bitcoin miners make money ahead of 'halving'

Bitcoin miners are making hay while sun shines. business has been yanked out of doldrums by cryptocurrency's recent rally - and now mining companies are racing to lock in profits before bitcoin's "halving", when rewards for producing tokens are cut in half.

next halving is expected in April 2024, a process designed to slow release of bitcoin, whose supply is capped at 21 million - of which 19 million have alrey been mined.

"You're seeing a lot of urgency to plug rigs in ahe of halving," said Gregory Lewis, analyst at brokerage BTIG that covers 13 biggest U.S.-listed bitcoin miners.

Bitcoin's hashrate - a measure of computational power needed to mine a coin - has spiked to an all-time high, according to crypto platform Blockchain.com. That means miners are having to use more and more power and speed to crack complex maths puzzles that earn m a bitcoin.

Analysts at J.P. Morgan estimate hashrate has hit record highs for 11 consecutive months, including a historic surge in October.

PLAYING GAME

Bitcoin has risen about 37 per cent in past month to around $37,000 after months of listlessness, a rebound that's encouraged miners to hook up ir powerful computers to crack puzzles and sell newly minted coins.

30-day average of revenue earned by miners has improved steily this year to hit a 18-month at $32.46 million on Nov. 11, blockchain.com data shows.

However, mining - a highly energy-intensive process - is still not as profitable as in its 2021 heyday.

A measure of miners' earnings from using 1 petahash per second of computing power in a day has risen to over $81 from $70 at start of November but remains well below a peak of $127 in early May, according to mining data platform Hashrate Index.

With six months to go till miners' share of rewards is slashed, y are looking for ways to keep ir margins from shrinking in highly competitive environment.

"Every halving forces miners not playing that game at a high enough level to get washed out," said William Szamosszegi, CEO of mining company Sazmining.

HALVING OPPORTUNITY

Bitcoin prices have typically rallied in past following halvings. Six months after first halving in 2012, price jumped to $126 from $12. After second halving in 2016, it went to $1,000 from $654 within seven months and in 2020 it shot up to $18,040 from $8,570 in same time period.

Bitcoin's third halving in 2020 brought down miner rewards to 6.25 bitcoin per block and upcoming one is set to push it down to 3.125 in April. At current prices, mining each block reaps $231,250. Matteo Greco, analyst at digital asset investment company Fineqia International, said many mining companies were upgring ir equipment and boosting ir hashrate power to stay competitive.

To conserve ir profit margins, some players have resorted to moving ir operations to Central American countries where energy prices are more affordable, and governments friendlier to cryptocurrencies.

"It's too early to say if all bitcoin miners are out of wood," said Ludovic Thomas, portfolio manager at Swiss-based Criptonite Asset Management that invests in digital assets. "Profitability increase always les to network hashrate and difficulty increase."