Riot Platforms, Inc. (NASDAQ: RIOT) acquired 33,280 next-generation Bitcoin miners from MicroBT Electronics Technology Co., LTD in preparation for Bitcoin’s halving in April of next year.
The company announced on Monday that the miners would be produced by MicroBT in the United States for Riot’s Corsicana Facility in Texas for USD$162.9 million.
The new miners are scheduled for delivery starting in December 2023. Miner deployment is planned to start in the Q1, 2024. When the miners are completely deployed, which is estimated to be completed by mid-2024, Riot’s self-mining hash rate capacity is projected to increase to 20.1 Exahash per second.
As part of the agreement, Riot has the option to acquire up to 66,560 additional M56S++ miners. If Riot decides to exercise the option in its entirety, the additional 66,560 miners would contribute an extra 15.3 EH/s to Riot’s self-mining capacity, potentially increasing it to a total of 35.4 EH/s. The option can be executed by Riot, either in full or in part, until December 31, 2024.
“These new models are among the most powerful and efficient miners ever made for Bitcoin mining and are designed and produced specifically for immersion cooling systems, such as those that will be used at our Corsicana Facility,” said Jason Les, CEO of Riot.
“These new miners will contribute an additional 7.6 EH/s to Riot’s self-mining capacity when fully deployed and will further enhance our already strong fleet efficiency in advance of the upcoming Bitcoin halving.”
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New partnership establishes strong domestic supply chain
The newly formed partnership between Riot and MicroBT will establish a strong domestic supply chain within the United States. This development is poised to expand the availability of domestically produced Bitcoin miners, marking a significant milestone for the industry.
MicroBT will manufacture these miners at a facility located in Pittsburgh, PA, thereby generating new employment opportunities and contributing to the growth of highly skilled jobs in the local area.
“The M56S+ and M56S++ are the most powerful machines we have ever developed and represent the culmination of major technological advancements made by our engineering teams,” said Jordan Chen, COO of MicroBT.
“All machines purchased by Riot will be manufactured in our facility in the United States, and this order will drive expansion of our operations allowing us to hire and train new staff to fulfill our growing United States-based manufacturing business.”
The Bitcoin halving refers to an event that occurs approximately every four years in the Bitcoin network. It is a pre-programmed adjustment in the Bitcoin protocol that reduces the rate at which new Bitcoins are created and introduced into circulation.
During a halving event, the reward given to Bitcoin miners for successfully mining a block is cut in half. This reduction in mining rewards effectively decreases the rate of Bitcoin supply growth, resulting in a gradual and controlled approach to the issuance of new Bitcoins.
The halving is an important mechanism designed to maintain scarcity and control inflation within the Bitcoin ecosystem. It has significant implications for miners, investors and the overall Bitcoin market, often leading to increased attention, speculation and potential impact on the price of Bitcoin.
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Texas is still a great place for Bitcoin mining
The Bitcoin mining industry in Texas has experienced significant growth, with a recent Reuters report indicating a 75 per cent increase in power consumption by Texas-based miners over the past year. Currently, these miners consume approximately 2,100 megawatts of the state’s power supplies. Interestingly, this demand represents about 3.7 per cent of the lowest forecast peak load for this year, as reported by the Electric Reliability Council of Texas (ERCOT), which operates the state’s power grid.
However, alongside this growth, the Bitcoin mining industry in Texas is also facing new challenges in the form of federal regulations. Proposed regulations include a 30 per cent tax on electricity usage specifically for digital mining. Additionally, both the U.S. Treasury secretary and commodities regulator have called for the establishment of a regulatory framework for the industry.
Despite these regulatory concerns, some counties in Texas have taken a different approach by offering tax incentives to attract miners. Furthermore, the availability of renewable energy sources such as wind and solar power is a draw for miners, as these sources could potentially supply around 39 per cent of ERCOT’s energy needs in 2023.
The combination of tax incentives and renewable energy sources continues to make Texas an appealing destination for Bitcoin miners, despite the evolving regulatory landscape.
In the month of April, Core Scientific’s (OTC: CORZQ) self-mining operations pulled in 1,126 bitcoins. By the end of the month, the company had around 142,000 bitcoin miners in operation. This number accounted for approximately 73 per cent of the company’s total number of miners, and a hashrate of 14.8 EH/s.
Marathon Digital Holdings (NASDAQ: MARA) chairman and CEO, Fred Thiel, announced that the company achieved a new milestone by producing 1,245 bitcoins in May. This marked a substantial increase of 77 per cent compared to the previous month and an impressive growth of 366 per cent compared to May 2022. The boost in production was primarily attributed to two factors: an increased hash rate and a significant rise in transaction fees.
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