Rolf Versluis, the founder of Horizen, a privacy-enabled sidechain platform cryptocurrency, has announced that he will temporarily close his 2.1 MW Bitcoin mining facility.
Versluis, who has been mining Bitcoin since 2016, explained his decision in his article sharing the circular BTC mining philosophy.
According to Versluis, the best time to make money in Bitcoin mining is when the price rises faster than the supply of new mining machines. This creates a gap between hash power supply and demand, allowing miners to earn higher profits. Versluis said that he took advantage of this loophole in 2019 to buy used Antminer S9 and L3+ machines cheaply and to mine Bitcoin and Litecoin until 2022, when they became unprofitable.
But Versluis said he doesn't want to invest in new machines right now because the numbers don't work for him. He estimates that he would have to spend $600,000 to purchase 600 S19 machines, which would currently earn him $36,000 per month.
However, he stated that block rewards will halve in eight months, which will make their machines unprofitable unless the Bitcoin price doubles and the hash rate stays the same.
Versluis argued that it would be better for him to buy Bitcoin directly with his money, rather than spend the initial cost on machines that may not pay back. He also said that if the BTC price drops or stays around $30,000, he expects to be able to buy used machines much cheaper in the next 12 months. Alternatively, he stated that if the price of BTC rises significantly and increases demand for mining space, he may sell his plant at a good price.
Versluis stated that he is in no rush to fill or sell his plant and will wait for the market to provide him with better conditions. He said that he still believes Bitcoin mining is a profitable and rewarding activity, but that it is only possible if done at the right time and with the right strategy.
*Not investment advice.