Feb 2024#Opinion

How Miners Survived the Crypto Winterand Prepare for the Bitcoin Halving

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Lana Izrina

Market Researcher

Ksenia Alikova

Analyst, R&D


Alisa Tkach



10 min


When Bitcoin dropped to $15,787 in November 2022 following the scandalous collapse of FTX, the crypto community braced itself for a difficult period. Rising electricity costs and increasing mining difficulty made the situation worse, with farm closures and operating at a loss becoming widespread. Those who managed to survive started preparing for the next challenge. The next Bitcoin halving is happening in 2024 and is likely to lead to declining revenues, increased competition, and higher mining difficulty.

However, the crypto community has become much more cautious and deliberate in its approach to investments and developing business strategies for its products. We interviewed 7 leaders of medium and large mining companies, including data centers and leading equipment suppliers, to find out which strategies and tactics helped them survive this crypto winter. We hope that their experience and recommendations will assist you in avoiding the most common mistakes, allowing you to maintain stability and, at best, significantly increase your business's profitability.

Spheres of activity among the surveyed experts

Crypto Winter 2022: Survival Mode

The recent bear market phase demonstrated yet again that only the most efficient and professional players remain in the mining industry. The market situation has made it increasingly challenging to extract maximum profits from mining, quickly recouping investments. Mining has long become a serious business, requiring patience, careful planning of equipment and software investments, as well as constant monitoring of opportunities to improve efficiency. For instance, some resourceful miners capitalized on the crypto winter by methodically purchasing equipment at reduced prices.

The main survival strategies during the crypto winter are based on mining optimization, reducing electricity expenses, and attracting long-term investments.

  1. Mining optimization. There are several effective ways to do it. The first of them is downvolting, which involves strategically lowering the operating voltage of ASIC devices. This is a method for increasing mining efficiency by adjusting the power supply to the equipment.     
    Secondly, depending on the current situation and chosen strategy, miners may resort to either temporarily shutting down machines or, conversely, overclocking equipment to generate higher income in the short term.
  2. The use of energy-efficient equipment, primarily new models of ASIC devices, is crucial. Another effective approach to sustainability is the utilization of immersion cooling.
  3. Diversification of income sources, for example, resale of equipment, client hosting of equipment, building of “custom” data centers, etc.
  4. Mining at a disadvantage and attracting long-term investments in anticipation of rising prices.

Jim Musgrave, a co-founder of Minerset, a large mining hardware distributor and mining farm operator shared his way of dealing with low prices and higher energy costs, “When the Bitcoin price drops significantly we are still able to operate our farm profitably thanks to optimization made possible using third-party firmware and other tools at our disposal. If we didn't have those it would be much harder to maintain profitability. Close monitoring of the farm performance, optimization and partnerships with firmware and tool providers are essential.

During the crypto winter, firmware becomes an indispensable tool. It allows you to configure ASIC devices and optimize their performance and power consumption. The firmware helps miners make tactical changes and continue to make profits even in unfavorable market conditions.

Managing energy costs is the next important aspect of crypto mining. Regulating ASIC operation depending on electricity prices allows miners to significantly reduce costs. This method involves turning on mining equipment during periods of lower electricity prices and turning it off during peak hours. “We have several modes of equipment operation that work in conjunction with the local energy market and special tariffs. Unlike the standard 100% uptime, we adhere to 65%. Our devices mine only during off-peak hours. The rest of the time they are in standby mode,” said Nikita Gribkov, CEO of Minto, a large network of data centers. While some were fighting for survival, others had formed competitive advantages in advance and successfully used them during the crisis. Minto's energy-saving approach allowed the company to continue operating smoothly even when many were forced out of business.

One could argue that this crypto winter put an end to small mining companies that relied on quick profits, did not plan their business models, and ignored the risk of Bitcoin and equipment price drops. “There is a lot of competition in the market. We are now seeing an increase in outflow, and it will continue until only large corporate players, who can afford to operate at a loss for a very long time, remain. They expect to make money in the long term by accumulating bitcoins or another cryptocurrency,” noted Aibek Baratov, former owner of a self-mining and hosting company and marketer at ZRÓDŁO TRADE.

Like many other seasoned cryptocurrency miners who have built a business on market research, Roman Deev, founder and head of Impuls Engineering, a company specializing in equipment hosting and data center services, barely noticed the decline of the market. “Those who know how the equipment works and understand the cyclical nature of Bitcoin are always in the black. And they are not afraid of any crypto winter,” Roman noted.

New Challenge: Thoughts On the Upcoming Halving

Experts are not too concerned about the upcoming Bitcoin halving. "These are all iterations of such a phenomenon as crises (like recessions and growth), just like on the stock market. I’m talking about the usual economy of fiat finance. Crises will inevitably occur, and this is natural. Since this is part of the system’s life, including the crypto world, which is increasingly gaining volumes in the general economy,” says Henry Hamilton, former owner of self-mining and farm construction companies and now CEO of Hamilton.bz. The expert adds in a few recommendations, “If I were still engaged in professional mining, as a risk management measure I would allocate part of my funds in advance to compensate for the decline in the market and profitably purchase equipment that is being sold out. This way I could level out losses and prepare for the behavior of, so to speak, “hamsters” (non-professional cryptocurrency market participant).  I can say one thing: in any financial and economic crisis, the “whales” (the so-called big players)  make money, so I would advise you to think like one of them. This is the only way to achieve success in this and any other business.”

The fourth halving is expected in April 2024. Unlike situational market fluctuations, halving is a regular and planned event, so most professional miners have developed strategies to not only save their income despite increased operational load but also to win because of halving.

You should mine as many coins as possible before the halving,” says Arseniy Grusha, founder of Wattum, one of the largest distributors of Bitcoin mining equipment in the United States. In addition, the expert emphasizes the importance of updating the equipment itself. “It is necessary to sell old equipment, which will still become ineffective after the halving, and replace it with newer equipment, which is what mainly large companies in the USA are doing. All this used equipment from the USA will go to other countries in Africa, South America, and directly to Russia.” Since there is a possibility that most miners will still sell their old ASICs after the halving, now is the best time to use firmware to increase hashrate and get more bitcoins.

Another popular practice among miners is to purchase used hardware at discounted prices, which can also be an effective strategy at the beginning of a bull trend, given that ASIC prices typically rise and fall with the price of Bitcoin.

Dynamics of ASIC and BTC prices. Source: crypto.ru

Life After Halving

Companies planning to expand their mining operations after the halving should remember the strategic approach of "mining for the long haul." The desire to quickly recoup investments will do no good. Professional mining has nothing to do with speculation or gambling, and those who understand this continue to make money in any market conditions.

The miners’ growth is directly related to the active implementation of technology and the continuous improvement of data centers.  Upgrading your machines, using energy-saving equipment, optimizing your electricity costs by adjusting mining speeds and modes, and finding cheaper sources of electricity - all of this significantly increases your chances of success.

Interestingly, some miners are already relying on alternative power. Solar, wind, hydro, and other alternative energy sources can become a sustainable option for miners. For example, Minerset is building an environmentally friendly center in South Carolina (USA) for the installation of mining equipment capable of providing fully controllable power of 10 MW from regenerative energy from nuclear sources.

Many miners attempt to locate their farms in areas with lower electricity costs, but this is not the only factor that influences mining efficiency. When selecting a location for a data center, rental availability is just as important as the cost of deploying and maintaining the mining infrastructure. Miners have recently been venturing into new territories, with Africa, Latin America, and Russia gaining popularity.

Mining companies that adhere to a long-term and comprehensive strategy, investing in a balanced and technologically advanced mining ecosystem, not only successfully cope with market shocks but also look to the future with optimism. They build new farms, buy more equipment, enter new markets, and attract investments.

Attracting investments and searching for partners

In the mining industry, even major players such as emcdMintoMinerset and Wattum are looking for long-term investment partners, emphasizing the importance of long and stable collaborations.

The primary criterion for selecting partners is a clear understanding that mining is a serious business that generates income over the long term (2-3 years). And finding a trusted partner in this venture often becomes another challenge.

We first try to understand whether the people we start working with share the same values and vision for the future. If we find common ground, we will continue to develop these relationships,” says Michael Jerlis, founder and CEO of emcd, a universal platform for mining and investment instruments.

Read more about this in the article The Cryptocurrency Market and Trust: A New Approach to Project Evaluation.’

In the mining industry, the importance of the trust factor cannot be overestimated. Business owners usually test the reliability of potential partners during personal meetings and conferences and then check their reputations. As a rule, valuable insights about a particular partner can be easily obtained at industry forums and during communication at relevant events.

The crypto community places great importance on personal recommendations. Creating new partnerships based on proven recommendations from personal contacts highlights the importance of a positive reputation in this close-knit environment. Reviews about the company - both positive and negative - spread quickly in the relatively small market of large miners, which is why trust is an important factor.

According to the experience of the BDC Consulting team, one of the most effective channels for finding partners can be outreach through the network of professional contacts on LinkedIn. So, a well-designed offer can bring from 1 to 3 partners per month. If we analyze the number of ASICs in businesses (see the distribution of companies by number of ASICs in the graph below), we can assume that the median for the B2B segment will be 218 ASICs. In this case, depending on the conversion and the cost of work by the business development team, the CPL could be less than $15.

 Distribution of companies by the number of ASICs

Find more insights on working with LinkedIn in our study, Mastering Linkedin: Strategies for Gaining Invaluable Insights from Interviewing C-level Executives’.

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