©Reuters.
Individuals and companies that mine bitcoin are recovering from the recent drop in the value of cryptocurrencies. They are investing heavily in new machinery and consuming more electricity than ever. This increase in activity is due to an upcoming software change in the , which could impact their profits.
Since February 2023, an analysis by TheMinerMag, based on publicly available information, shows that the top 13 mining organizations have spent more than $1 billion on cutting-edge mining equipment. CleanSpark (NASDAQ:) and Riot Platforms (NASDAQ:) are leading these investments, with spending of approximately $473 million and $415 million, respectively.
The goal of this spending is to improve operational efficiency and obtain electricity at lower prices. This is important because mining requires a lot of energy to process and confirm transactions on the blockchain, which in turn generates bitcoins.
At the same time, these investments have led to an increase in the sector’s electricity consumption. According to Coin Metrics, the sector’s electricity consumption reached a new record of 19.6 gigawatts last month, up from 12.1 gigawatts the year before. That amount of electricity could power about 3.8 million homes in Texas, where many mining facilities are located.
These numbers have sparked conversations on various online platforms. American billionaire and investment fund manager Bill Ackman also shared his thoughts on the matter.
“Imagine this situation: The price of bitcoin increases, which leads to an increase in mining and energy consumption. This increase in energy consumption causes an increase in energy prices, which results in a “rising inflation and a weakening dollar. This in turn drives demand for bitcoin and mining, which increases demand for energy again, and the cycle repeats itself,” Ackman said in a recent ticket.
“If the value of bitcoin continues to rise indefinitely, energy costs could skyrocket, which could lead to an economic downturn. I might want to consider buying bitcoins,” he added with humour.
The recent boom in the cryptocurrency sector is due to a significant rise in the value of bitcoin. This was encouraged by the launch of exchange-traded funds linked to bitcoin itself and the anticipation of a bitcoin halving event planned for April.
After a 64% drop in value in 2022 due to various problems in the cryptocurrency sector, the price of bitcoin has increased fourfold.
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