Within China, the government’s regulatory crackdown on Bitcoin mining has spelled disaster for domestic Bitcoin miners. For miners outside of China, however, these major market shifts have opened up an opportunity to make mining more profitable than ever.
The drop in global hashrate makes Bitcoin mining more profitable as fewer miners compete for the block reward. Experienced and seasoned miners who understand the level of competition that resides in this industry are taking advantage of this opportune development by leveraging the network and capital that larger players have during this temporary dip in hashrate, and they stand to profit handsomely.
Just How Significant is China’s Ban on Crypto?
The intense regulatory mining climate in China has resulted in mines being forcibly closed, a huge drop in global mining hashrate, and an exodus of miners and equipment to mining hot spots such as the U.S. and Kazakhstan. With 90% of China’s Bitcoin mining capacity shut down, the Bitcoin market price has tanked to almost half of its record-breaking high of $65,000 in April 2021. However, much more is required to scare away crypto enthusiasts from an investment that has paid for itself multiple times over. Miners are scrounging for areas outside of China to capitalize on this opportunity as Bitcoin mining gets more profitable due to lowered block difficulty.
Why Mining is Expected to Rebound
As the world's largest Bitcoin hashrate producing region faces a huge drop in hashrate, other countries have jumped on the opportunity to increase their Bitcoin yields. The drop in hashrate also allows miners to generate up to 27% more Bitcoin, at the time of writing, thanks to decreased mining difficulty, making it an extremely profitable time to be a Bitcoin miner. The benefits for Bitcoin miners are not expected to dissipate for a while: most of the countries pursuing growth in Bitcoin mining don’t have the capacity to expand their mining capabilities immediately. This will keep these yields high for at least 1-2 years while mining infrastructure is built to meet demand outside of China. This provides a huge opportunity in budding mining regions with existing data center infrastructure to meet the demand for hosting space.
A recent venture with Enegix has given Wattum customers access to 8 MW of low-priced energy for Bitcoin mining in Kazakhstan. Kazakhstan is an attractive destination for crypto mining thanks to its low import taxes, a crypto-embracing government, and optimal natural air cooling. The security of mining in a country that has vocally shown its support for Bitcoin is invaluable given the result of governmental regulatory pressures in China.
A Growing Opportunity
A key difference between investing in Bitcoin and mining Bitcoin is that profits for Bitcoin miners are driven both by the market price for the digital coin, as well as by how much Bitcoin is distributed per block reward. The recent plunge in hashrate has decreased the difficulty of solving blocks, increasing the average mining yield. That means it's a great time to be a Bitcoin miner, even with the drop in the Bitcoin market price. You can yield a quarter more Bitcoin than before, with all of the same equipment and hashrates. This makes it twice as profitable to mine Bitcoin currently, and likely for the next two years as mining infrastructure rushes to catch up. So while Bitcoin is trading in the $30,000 range, your profits will be reminiscent of a time when it was trading near the $60,000 mark; miner prices are currently half of what they were when Bitcoin was at $60,000, while the profitability of these miners in terms of dollar value remains the same.
To start mining, the first steps are to line up quality equipment and hosting space that will enable you to mine profitably and with minimal interruption. In a time when quality hosting space is scarce around the world, Wattum offers competitively-priced hosting in the U.S., Canada, Russia, and our growing mining hotspot, Kazakhstan. For whichever stage you’re at in your mining journey, we have you covered. From top-of-the-line equipment and expert mining management to comprehensive post-purchase care, our team is committed to giving you access to a suite of solutions that support a successful Bitcoin miner.