H.C. Wainwright & Co. has released its latest update on Bitcoin mining, showing a mixed third quarter for miners affected by broader market uncertainties and the upcoming April 2024 Bitcoin halving.

Per the analyst note shared with crypto.news, Bitcoin (BTC) prices remained volatile throughout Q3 2024, influenced by concerns about the U.S. economy, international tensions, and the upcoming presidential election. 

After dipping as low as $49,100 in August, BTC prices bounced back following the Federal Reserve’s decision to cut interest rates in September. 

This rate cut marked the first reduction in four years and sparked a rally, pushing BTC to around $63,250 by the end of the quarter.

Spot Bitcoin ETFs

A significant demand driver was U.S.-based spot Bitcoin ETFs, which saw net inflows of $4.3 billion during Q3, up from $2.4 billion in Q2, according to the analysts.

A third of these inflows occurred in just eight days following the Fed’s rate cut. Analysts expect the upcoming election on November 5 to have a major impact on BTC prices. 

They predict a Trump victory could push BTC to new highs, while a win by Vice President Harris might lead to a short-term price correction.

Bitcoin miner operations

Public Bitcoin miners expanded operations significantly in Q3, adding 35 exahashes per second to the global network hash rate—a measure of computing power used for mining—resulting in a 4.5% increase from the previous quarter.

Despite this expansion, miners faced challenges due to the April 2024 Bitcoin halving. This event occurs every four years and cuts the reward miners receive by half, making it harder to profit from mining.

For those unfamiliar, Bitcoin halving refers to reducing the number of new Bitcoins miners earn for adding new blocks to the blockchain. This is part of Bitcoin’s design to control inflation and ensure there will never be more than 21 million Bitcoins in circulation. 

As a result, miners must become more efficient or rely on higher Bitcoin prices to remain profitable.

Despite these hurdles, miner revenues fell 29% in Q3 to $2.6 billion, with the average price miners earned per terahash dropping significantly. However, analysts see opportunities ahead. 

The combined market capitalization of public BTC miners declined by 7%, signaling a potential buying opportunity for investors, especially as the sector has already rebounded by 12% in the current quarter, per analysts. 

With earnings season for miners kicking off this week, all eyes will be on how companies perform, particularly as BTC surges over $73,000 this week.

Malaysia’s national electricity provider, Tenaga Nasional Berhad, has reported losses exceeding 440 million ringgit (about $101 million) due to electricity theft linked to illegal Bitcoin mining activities. 

Local reporting from The Star indicates that since 2020, this theft has significantly impacted TNB’s finances, resulting in a loss of 103 million ringgit in 2023 alone, according to Suhai Rizain, the director of Malaysia’s Criminal Investigation Department.

The losses from crypto mining have increased sharply over the years. In 2020, TNB recorded losses of 5.9 million ringgit. This figure escalated to 140.4 million ringgit in 2021, followed by 124.9 million ringgit in 2022, and 67.1 million ringgit last year. 

Bitcoin mining in Malaysia

Earlier this year in July, the TNB reported similar figuresn noting losses exceeding $755 million due to illicit Bitcoin mining activities from 2018 to 2023.

The deputy minister of energy transition and water transformation, Akmal Nasir, acknowledged that while crypto mining accounted for a small portion of total energy consumption, it had a significant financial impact on the country.

Additionally, authorities seized nearly $500,000 worth of electrical items linked to illegal mining operations and launched a crackdown on tax evasion involving digital assets.

The Criminal Investigation Department plans to investigate the factors contributing to these substantial losses, particularly the trends observed in 2022 and 2023.

Illegal Bitcoin (BTC) mining involves using unauthorized electricity to power computers that solve complex mathematical problems, enabling users to earn Bitcoin. This practice can lead to significant electricity consumption, which results in theft when miners do not pay for the power they use.

Colorado-based Bitcoin mining company Revolve Labs has announced plans to build a $60 million data center in Glencoe, Minnesota, as part of its effort to expand its mining capacity. 

The proposed facility would include one or two AI data centers, cooling systems, and backup generators, according to the Minnesota Star Tribune. Its goal is to bolster the company’s ability to process Bitcoin (BTC) transactions while addressing local concerns about noise pollution.

The facility, currently in the preliminary planning stages, would employ around 10 people and could cost between $40 million and $60 million.

The company discussed the project in a September meeting with the Glencoe Economic Development Authority. The site, which spans approximately 6.2 acres, would house both the data center infrastructure and a new power substation to support the expansion, per the Star Tribune. 

Bitcoin mining is a resource-intensive process where specialized computers solve complex mathematical problems to validate transactions on the Bitcoin network. In return, miners receive Bitcoin as a reward. Data centers like the one Revolve Labs plans to build are essential for supporting these operations, which require substantial computational power and energy.

In other crypto and Minnesota related news, the Federal Reserve Bank of Minneapolis published a working paper on October 17, recommending governments either ban or tax Bitcoin to maintain permanent primary deficits.

The paper labeled Bitcoin as a “balanced budget trap” that hinders policy implementation, especially for governments relying on nominal debt.

Bitcoin mining noise complaints

Mining facilities in Glencoe have sparked some controversy due to the noise generated by the mining equipment and cooling systems, according to the Star Tribune.

Local residents have raised concerns about noise levels reaching up to 85 decibels, comparable to the sound of a lawnmower. Revolve Labs has faced similar complaints in other locations, including Windom, Minnesota, where the company withdrew a previous expansion proposal following community pushback.

Similarly, Texas communities have inherited Bitcoin mining facilities and are attracting companies like Marathon Digital and Hut 8 due to their low energy costs and flexible power grid.

However, the influx of mining operations in Texas has caused noise levels as high as 91 decibels, leading to hearing loss, headaches, and sleep disturbances among local residents. These health issues have particularly affected older residents, raising concerns about the impact of mining on community well-being.

Despite concerns of noise, Revolve Labs operations have generated significant economic benefits for the city of Glencoe. According to Dave Meyer, general manager of the Glencoe Light and Power Commission, Revolve Labs’ mining operations have brought in more than $500,000 in net annual revenue for the city. 

These funds have been used to support public infrastructure projects, such as streetlight improvements, while helping to prevent an increase in electrical rates for local residents.