Bitcoin miners, rebounding from the recent cryptocurrency downturn, are pouring billions into new equipment and setting energy consumption records, in light of an impending software update in the biggest cryptocurrency that could affect their revenue streams.
Since February 2023, according to TheMinerMag's analysis of public documents, the top 13 mining companies have spent over $1 billion on high-tech mining hardware. CleanSpark (NASDAQ:CLSK) and Riot Platforms (NASDAQ:RIOT) are at the forefront, having invested about $473 million and $415 million, respectively.
These investments aim to boost operational efficiency and secure cost-effective electricity, a crucial factor given the energy-intensive nature of mining, which involves verifying blockchain transactions to earn Bitcoin.
However, it has simultaneously raised the industry's power usage, which hit a record 19.6 gigawatts last month, up from 12.1 gigawatts a year earlier, as estimated by Coin Metrics. This level of electricity consumption is enough to supply power to roughly 3.8 million households in Texas, which hosts a significant number of these mining facilities.
These stats ignited discussions across social media platforms, where American billionaire and hedge fund manager Bill Ackman was among those who commented on the issue.
“A scenario: Bitcoin price rise leads to increased mining and greater energy use, driving up the cost of energy, causing inflation to rise and the dollar to decline, driving demand for Bitcoin and increased mining, driving demand for energy and the cycle continues,” Ackman wrote in an X post.
“Bitcoin goes to infinity, energy prices skyrocket, and the economy collapses. Maybe I should buy some Bitcoin,” he added.
This increased activity in the crypto sector is driven by a significant surge in Bitcoin's value, spurred on by the introduction of spot Bitcoin exchange-traded funds (ETFs) and the anticipation of the halving event set for April.
Following a 64% decline in 2022 due to various crypto industry crises, BTC’s value has since quadrupled.