Canada-based Bitcoin mining firm Iris Energy is vying to expand its computer fleet ahead of the impending Bitcoin halving event—scheduled to take place in April 2024. In a move that will give a major fillip to its mining capacity, the company has reportedly purchased 7,000 of Bitmain’s newest S21 miners for $19.6 million.
According to a press release by the company, the expansion of its computer fleet will result in a 25% increase in Iris Energy’s total hashrate from 5.6 exahashes per second (EH/s) to 7.0 EH/s. The company expects its newly-purchased machines to ship before the halving event occurs.
“The purchase is expected to be funded from existing capital sources, including cash in bank (~$64 million, no debt), operating cash flow and other recently disclosed funding programs.Iris Energy
How does Bitcoin mining work?
To build a block of Bitcoin, crypto miners first need to solve a complex mathematical equation. “Hashrate” is the number of hashes – or guesses – they can produce to crack the puzzle. One quintillion hashes make one exahash.
Whichever miners solves the problem first is rewarded with freshly minted BTC. The process then starts from scratch. The faster miners can generate hashes, the larger their profit margin. A company with a higher hashrate has a greater chance of winning the race each time there’s a new block on the network.
Earlier this year, Iris announced that it was eyeing a hashrate target of 9.1 EH/s by 2024. Now, the company wants to achieve a capacity of 9.4 EH/s and look for additional hardware opportunities in the market. Shares of Iris Energy—which trade on the NASDAQ under the IREN ticker—rallied 9.5% after the Bitcoin miner announced its expansion plan.
Halving threatens profits of Bitcoin miners
With the next Bitcoin halving event just six months away, miners are facing an uphill battle to remain profitable. Come April 2024, miners will see their BTC rewards cut in half from 6.25 BTC to 3.125 BTC. This, in turn, could make mining a less sustainable business, leaving breathing space for only the most cost-efficient companies.
In late August, Todayq News reported that Bitcoin miners have seen a sharp decline in their revenue with the Bitcoin network’s hashrate soaring. Moreover, Bitcoin miners are facing intense pressure to sell some of their BTC holdings due to high energy costs and rising hashrate.
On the other hand, some are of the view that halving may bring about the next Bitcoin bull market, making the industry more profitable. The growing focus on cost-efficiency and renewable energy, a core theme underpinning the 2023 World Digital Mining Summit, could also herald a new beginning for the crypto industry.