Potential sluggishness in the price of Bitcoin after the Bitcoin halving could tank the share prices of high-cost public miners in the United States, forcing some to even move offshore.

“We might see a mining stock blood bath as investors realize these companies are barely making money,” says Jaran Mellerud, founder and chief mining strategist of Hashlabs Mining, referring to what could happen if the Bitcoin ( BTC ) price doesn’t rise substantially after the halving .

Mellerud is now eyeing the three to four-month window after the halving to see the extent to which miner profitability is pressured by the slashing of block rewards.

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This map will look very different in 1-2 years as miners in Africa and Latin America expand operations. #Bitcoin mining ⛏️ rigs will ruthlessly hunt down the cheapest… pic.twitter.com/KD50g9mWHe

— Bradley Dean (@TBG9270584) February 17, 2024

The next Bitcoin halving is expected to occur on April 24, according to CoinMarketCap. It will reduce Bitcoin miner rewards from 6.25 BTC ($321,000) to 3.125 BTC ($160,500), though it has historically been followed by a surge in the price of Bitcoin.

In the last halving event on May 11, 2020, Bitcoin was priced at $8,750 and surged over 430% five months later in October from $11,500 to $61,300 by mid-March 2021.

But if Bitcoin fails to make a major run before that three to four-month interval, “a significant part of the network might have to turn off their machines, particularly those paying hosting rates of $0.07 per kWh or more,” Mellerud said, adding that a large concentration of these inefficient miners are located in the United States.

As a result, Mellerud expects some of Bitcoin’s hash rate to shift from the U.S. to countries with cheaper electricity rates, particularly in Africa and Latin America.

“My company, Hashlabs, is currently seeing significant demand from US-based miners who want to move their machines to Ethiopia, where hosting rates are 30-40% lower than in the United States.”

Bitcoin mining is one of the least risky industries in the world if you are among the lowest-cost operators.

— Jaran Mellerud ⛏️ (@JMellerud) February 18, 2024

Profitability concerns resurfaced in late January when Cantor Fitzgerald reported that 11 publicly-listed Bitcoin miners wouldn’t mine profitability post-halving if Bitcoin’s price remained around $40,000 (the price of Bitcoin at the time).

Cantor Fitzgerald’s “all in per coin” metric refers to the total costs a Bitcoin miner would incur in producing a single Bitcoin, including electricity costs, hosting fees and other cash expenses.

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But with Bitcoin’s price now sitting at $51,000, only four of the 13 mining firms now fall under the profitability threshold.

However, head analyst at Bitcoin mining firm Blockware Solutions, Mitchell Askew, told Cointelegraph that most U.S. public miners would operate at low enough electricity rates to remain profitable, especially the firms that bought more efficient machines throughout the bear market.

Askew countered Mellerud’s argument that most inefficient miners are based in the U.S., saying they only comprise a minor share of Bitcoin’s total hash rate. As a result, any hash rate lost in the U.S. would be negligible.

However, even in the event of unprofitability, Askew says a few reasons will prevent U.S. miners from moving offshore.

“[Many of them] are locked into a fixed hosting contract in which they must continue to mine regardless of profitability,” while others mine for the sole purpose of stacking non-Know Your Customer Bitcoin and are less concerned with profitability, Askew said.

Related: Riot, TeraWulf and CleanSpark best-positioned miners for Bitcoin halving — CoinShares

Mellerud touted Ethiopia, Nigeria and Kenya as the best-positioned African countries to capture a larger share of the hash rate should a mining migration event unfold.

Ethiopia, in particular, has a “massive hydropower surplus” and has several Chinese miners moving there to mine, said Mellerud, who expects the African country to pick up 5–10% of Bitcoin’s total hash rate over the next couple of years.

Meanwhile, Mellerud said Argentina and Paraguay are the most promising mining countries in South America.

A fascinating trend to follow

Mining might decentralize away from the US towards dozens of countries in Africa, Latin America, the Middle East, and Asia, where many of the sites are off-grid, making the Bitcoin network much more robust https://t.co/ia6zxECEw9

— Alex Gladstein ⚡ (@gladstein) February 7, 2024

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