As Bitcoin’s halving approaches, miners around the world have been forced to make adjustments to adapt. The halving will double the cost of producing Bitcoin (BTC) overnight, but fortunately the cryptomint has been reacting positively to the upcoming event.
While almost everyone in the cryptomone space is optimistic about the event, and with good reason, the path that Bitcoin Loophole, Corona Millionaire, Bitcoin Formula, The News Spy, Ethereum Code price will take after halving is unknown, especially given the coronavirus pandemic and the massive wave of unemployment that has come with it. While it may be a stressful event for Bitcoin holders, it’s even more so for those who have been responsible for producing Bitcoin – the miners.
For Bitcoin miners in countries with subsidized electricity like Venezuela or low electricity prices like China, where most of the hash power in the Bitcoin network resides, an increase in production costs can be manageable. Even those with mid-range prices but equipped with the latest mining equipment are prepared. But for those at the higher electricity levels, such as those found in Europe, their operations can depend heavily on the post-Halving price action of Bitcoin.
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European miners prepare for halving
So that’s how miners in Europe, where electricity prices are some of the highest in the world, have prepared for halving.
While some may be forced to close down if the price doesn’t go their way, the miners have known about halving for a long time and have been able to prepare for the event. According to Jake Stott, a member of the founding board of dGen, a Berlin-based think tank that recently surveyed many key European players in the industry, the miners have had a chance to catch up:
„The best thing about Bitcoin’s halvening is that it’s a known revenue shock. The miners will have been preparing for this day since the last halving years ago. Upgrading to the latest machines, newer infrastructure, providing cheaper energy sources and matching the right group are key. The miners are well prepared for all scenarios related to the price of Bitcoin.
While it is important to have the most up-to-date equipment and infrastructure, it will not be enough. Youssef El Manssouri, co-founder and CEO of Sesterce, a French company that provides mining services, told Cointelegraph:
„It’s very difficult to anticipate what will happen after halving, the most logical thing seems to be to prepare for the worst case scenario when trying to negotiate electricity contracts and renew the machine fleet. That’s what we’ve been doing at Sesterce for several months now.
Equipment upgrades and the provision of low-cost electricity through partnerships are the first steps for miners in Europe, but there are also other solutions that can prepare them for the volatility that may ensue after halving, including hedging strategies and credit build-up. According to Antoni Trenchev, co-founder of the crypto-currency credit issuer Nexo, this is already happening in the region. He told Cointelegraph:
„There’s a growing variety of financial instruments available for digital asset management and with that, a set of services that cater specifically to the needs of miners. Notable examples of these focus on miners securing an average selling price in the future or securing against hashrate changes through upcoming hashrate derivatives. Miners make up a significant portion of Nexo’s customer base and many of them choose our standard cryptomoney-backed credit line to maintain and grow their operations or take advantage of newly issued BTCs.