HIVE Digital Technologies has announced plans to construct a 100-megawatt Bitcoin mining facility in Paraguay, marking its first venture into the country.
The move is expected to more than double the company’s mining hashrate, with the new site projected to increase its capacity from 5.6 exahashes per second to 12.1 EH/s upon completion.
The announcement follows a recent visit by HIVE executives to Paraguay, where they engaged with President Santiago Peña and other senior government officials.
HIVE Executives Identify Growth Potential in Paraguay
According to a statement released on July 22, HIVE executives identified significant growth potential in the region.
Energy for the new facility will be sourced from Paraguay’s Itaipu hydroelectric dam, a key player in the local energy landscape.
The dam, which meets the country’s entire electricity demand, also has ample surplus power, making it an attractive option for Bitcoin miners.
HIVE to Expand Bitcoin Mining Capacity by 100 MW in Paraguay https://t.co/1P4bVRvLvQ
— HIVE Digital Technologies (@HIVEDigitalTech) July 22, 2024
However, the timing of HIVE’s announcement coincides with a recent decision by Paraguay’s state-run electricity grid operator, Administración Nacional de Electricidad (ANDE), to increase electricity costs for legal cryptocurrency miners.
This price hike, slated to take effect on August 1, has sparked concerns among miners, who argue it could cost the country’s economy up to $1.5 billion.
HIVE’s planned facility is projected to contribute over $100 million to ANDE over the next three years.
In addition to the mining site, HIVE revealed it has acquired 500 Bitmain S21 Pro Antminers, set to be shipped this month.
The expansion into Paraguay will make it the fourth country where HIVE operates, joining Canada, Iceland, and Sweden.
HIVE Digital Technologies currently holds 2,521 Bitcoins, valued at over $170 million.
Following the announcement, HIVE’s share price rose 8.4% to $4.50 on the Nasdaq, reflecting a positive market reception.
Despite a challenging start to 2024, the company has seen a 2.5% increase in its stock this year.
Bitcoin Miners Face ‘Capitulation’
It is worth noting that Bitcoin miners are facing a critical phase known as “capitulation” as their profits diminish amidst the recent sell-off in the Bitcoin market.
Miner capitulation occurs when miners reduce their operations or sell a portion of their mined Bitcoin and reserves to sustain their operations, earn yield, or hedge their Bitcoin exposure.
One significant indicator of capitulation is the decline in Bitcoin’s hashrate, which represents the total computational power securing the Bitcoin network.
The hashrate has experienced a substantial 7.7% decrease, hitting a four-month low of 576 EH/s after reaching a record high on April 27.
The similarity between this decline and the post-FTX collapse conditions in December 2022 suggests a potential market bottom.
Furthermore, miners have been significantly underpaid during this period, as indicated by the miner profit/loss sustainability indicator.
Their daily revenues have declined by 63% since the halving, where both Bitcoin’s base block rewards and transaction fee revenue were higher.
The total daily revenues have dwindled from $79 million on March 6 to $29 million at present.
Additionally, the revenue generated from transaction fees now accounts for only 3.2% of the total daily revenues, marking the lowest share since April 8.
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