Miners are doing tremendous preparations as the halving date of Bitcoin approaches. To better understand potential difficulties and advantages, they are researching the outcomes of previous halving on the Bitcoin network and the reactions of the cryptocurrency market at the time.

On April 16, 2024, the block reward will be cut in half from its current 6.25 bitcoin to 3.125 bitcoin. This will be the fourth time Bitcoin has been halved.

As a result, the energy required to mine a bitcoin has doubled, though miners can make up for this by upgrading to more efficient hardware, being more frugal with their energy use, setting aside a cash cushion, and/or hedging their bets in the financial markets.

Let's take a look at the measures miners are doing to get ready in each of these areas.

Some Bitcoin miners in North America have already made large investments in the most efficient miners on the market in anticipation of the next halving, and others are planning to do the same.

With a hash rate of around 11 EH/s, the Antminer S19 XP is the most efficient mining machine currently available, and Marathon Digital (MARA) has ordered 78,000 of them. By mid-2023, their operating hash rate in North America will reach 23 EH/s, thanks to the installation and activation this year of the majority of the machines that were supplied in 2022.

To increase their hash rate to 16 EH/s by the end of the year, CleanSpark (CLSK) revealed in April 2023 that they had purchased 45,000 Antminer S19 XP mining rigs, which will be deployed in Q3 2022.

To raise its self-mining capacity to 20.1 EH/s upon full deployment in 2024, Riot Platforms (RIOT) stated in June 2023 that it has purchased 33,280 next-generation Bitcoin miners from MicroBT, giving an extra 7.6 EH/s miners.

Controlling when Bitcoin mining machines are turned on and off requires access to the physical locations where they are installed.

Considering that the cost of energy used to mine Bitcoin is expected to double at each halving, miners must be able to make use of the cheapest sustainable and renewable energy cost available. If they can't get their hands on fixed-price energy contracts, they need the option to reduce their use as the cost of electricity makes Bitcoin mining unprofitable.

CleanSpark (CLSK) is preparing for the halving by managing its power strategy in Georgia (GA), creating automation to maximize uptime, and developing firmware that allows them to underclock and overclock as the situation presents itself.

Several Texas-based miners have been increasing their profits by focusing on energy measures in recent months. Taking advantage of participation in the Electric Reliability Council of Texas (ERCOT) market, Riot Platforms has supplied electricity when necessary and shut down its systems to help balance the grid. To maintain a low Bitcoin mining cost, it has secured a long-term power purchase deal. As a result of taking part in these programs, the business made $8.4 million in June 2023 from electricity sales and $1.6 million from demand response.

Bitcoin's price has not always increased after a halving, even if there is now half as much of the currency available. It took nearly five months for the Bitcoin price to gain traction after the last halving in 2020. Miners must prepare for the halving by amassing cash reserves and a long enough cash runway to compensate for the sudden drop in income.

Recently, several Bitcoin miners have been incorporating new revenue streams and expanding their operations. TeraGo Inc, a data center company, was acquired by Hut 8 (HUT) in January 2022, and Hut 8 subsequently stated that it had acquired TeraGo's cloud and colocation data center business. After the deal closes, Hut 8 will be in a position of unique positioning within the digital asset ecosystem as a premier high-performance computing platform.

A five-year deal to provide colocation services from the company's flagship Kelowna data center was also announced in June 2023. This partnership would aid the operations of the Interior Health Authority of British Columbia.

Companies like Hive Digital Technologies (HIVE) and Iris Energy (IREN) are branching out into new areas including HPC (high-performance computing), the cloud, and AI.

There are now businesses that provide a service to help miners protect themselves from fluctuations in electricity costs and hash rates. In the run-up to the halving, this could present miners with a chance to capitalize.

The aforementioned is not an entire list, but it should help shed light on the difficulties these Bitcoin miners face as they get ready for the next halving.

If the price of bitcoin rises sufficiently before the halving, readers can disregard the first three statements (because a higher price is good for miners in general).

Currently featured in Compass Mining, my piece on Financial analysis and a comparison of Bitcoin mining margins earned in Q1 2023 are also included in How Miners are Preparing for the Halving.