The Bitcoin halving occurring on 20 April is set to trigger multibillion-dollar declines in revenue for the very companies that ensure the digital currency’s smooth functioning, as costs begin to rise.
For enthusiasts of Bitcoin , a once-every-four-years software update called the “halving” has long been held as one of the keys to propping up its value.
Marathon Digital Holdings Inc., CleanSpark Inc. and other miners, which compete for a fixed Bitcoin reward by solving mathematical puzzles using superfast computers, have invested in new equipment and sought to buy smaller rivals in an attempt to cushion the drop-off in revenue. The event this month is coming after the digital currency has more than quadrupled since November 2022.Miners will need to continually spend more money in a never-ending, technological arms race for smaller rewards.
The update, the fourth since 2012, was preprogrammed by the anonymous Bitcoin creator Satoshi Nakamoto to maintain the hard cap of 21 million tokens to keep it from becoming inflationary as a currency. Amazon.com Inc. is set to spend almost $150 billion on data centres, while Blackstone is building a $25 billion empire of centres.“The artificial intelligence crowd is willing to pay three or four times what Bitcoin miners were paying last year” for electricity, said
Large-scale Bitcoin miners tend to lock in energy prices, typically for a few years, said Greg Beard, CEO of public Bitcoin miner Stronghold Digital Mining Inc.Miners compete for a fixed amount of reward, with winner-take-all for the first to successfully process a block of transactions on the Bitcoin blockchain.The more computing power a miner has, the more likely it is to earn the reward. But it’s getting harder.
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