How Bitcoin Miners in Europe are Preparing for Halving event
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  • Bitcoin halving is to take place in the next 6 hours which might potentially be the most followed event for crypto enthusiasts.
  • While Europe operates at a higher tariff bracket, political stability and the ease of being able to use renewable energy sources balances this cost giving European miners an upper hand compared to other countries. 
  • In the foreseeable future which might involve Bitcoin to a higher degree, governments across the world must ensure they aid miners and help in smoothening trading to boost their economy. 

Bitcoin miners are currently extremely busy since the past few days. And for good reason. With Bitcoin’s mining rewards halving in the next couple of hours, everyone in the market is awaiting the event and the buildup surrounding the event has grown exponentially. More so after Bitcoin witnessed the $10K threshold.

In the past the two times that Bitcoin saw halvings in 2012 and 2016, there was an intense boom and the currency ended with higher prices than before the event, therefore resulting in increased traction for Bitcoin. As a result, the halvening has caused an increase in interest from individuals, as well as governments and large enterprises. 

Given that the hype of the cryptocurrency’s event is increasing every single day, it is worth delving deeper into the currency’s future after its halving event, and whether or not the crypto asset will witness a major financial upward curve.

What is Bitcoin halving?

Before going further, it’s important to understand what this event actually is. 

In essence, every four years or after 210,000 blocks mined, the reward given for processing transactions is cut in half. This also slices the rate at which new coins are released into circulation by half therefore reducing available supply. This causes other assets with low supply to have high demand which then pushes the prices back up.

This halving process will end with 21 million coins in the year 2140. 

In 2012, the first halving saw an increase from $11 to circa $1150. During the second Bitcoin halving in 2016 the price went from $650 soaring to nearly $20,000 by 2017. Over the course of a year while this peak slowed down to nearly $3,200, it is still 400% higher than its price before. This proves how successful the event has been. 

While this system has worked so far, the halving is enveloped in much speculation, volatility, and unpredictability as to how the market will be affected.

European miners at an advantage due to cheaper costs

One of the most essential elements required to make the most of an event as this is having a resourceful ecosystem which comprises better software, hardware, and renewable energy to make it cheaper and cost efficient. There are all advantages for European miners. 

Given how halvenings are predefined events, a few preparation tasks are always planned.

“[S]ourcing cheaper electricity, buying new more efficient hardware and hedging financially for the upcoming risk,” are some of the groundworks miners plans in Europe, Alejandro De La Torre, Vice President of Poolin told dGen in an interview.

And despite the fact that Europe’s has a higher tariff bracket making it more expensive than other countries, miners are still better prepared for the halvening. 

In de la Torre’s words: “I feel miners in Europe will be relatively better off than other mining regions on the globe, simply because miners in Europe have needed to be more efficient for a longer time.

“Mining farms in Europe have, on average, higher electrical costs so they tend to upgrade quickly, use firmware that is more efficient and generally have better engineered data centers to take advantage of local weather. These reasons could lead European mining farms to fare better in the upcoming halving.”

Echoing a similar sentiment, Philip Salter, Head of Operations at Genesis Mining told dGen that the halvening “should impact all farms around the globe the same. Operating costs will be more important than before, so the miners that use cheap, renewable power sources will come out on top.”

While better services for minors is important for those in the industry, so is the use of sustainable energy. Salter stressed that Europe’s “renewable power sources” will enable it to be in “competition with the mining facilities in China”.

Importance of government support for cryptocurrency

Apart from green energy, Salter said that:

“[g]enerally, we need governments to understand the mining industry.” 

“[T]he more big players start mining, the more decentralized, secure and fault resistant Bitcoin becomes,” he added. 

De la Torre said that governments globally must take active steps and be prepared “to the possibility of [B]itcoin staying viable for many years to come.”

Similarly, Thomas Heller, the Global Business Director of F2Pool added that:

“[a]s a government, you don’t want to not be at the table if things really progress and move forward. It doesn’t mean they have to have a huge interest in Bitcoin mining.”

In fact, promoting a supportive environment to stimulate trading can accelerate the economy, according to De la Torre.

“[J]ust like every other industry out there, they create jobs,” he declared.

Clearly, looking at the post-halving surges after the first two halvings, it takes no expert to say that Bitcoin most probably will see a similar growth following its upcoming halving. However, this time, thanks to the ongoing COVID-19 pandemic and the impact it has had on the stock market around the globe, time will tell how the situation affects Bitcoin’s financial future.