Competition among Bitcoin miners is intensifying. Mining companies are investing large sums of money for better computers. What is driving them?

After a period of silence during the crypto winter, the Bitcoin-mining companies finally returned to the market. Because of the upcoming halving in April, competition among them is fiercer than ever, as Bloomberg reports.

The leading mining companies have therefore ordered technology worth about a billion US dollars since February 2023. CleanSpark Inc. and Riot Platforms have spent the most with more than US$400 million each, according to data from TheMinerMag.

Miners use special computers with relatively high energy requirements to validate transactions on the blockchain and then receive rewards in the form of Bitcoin, known as the "block grant."

Therefore, they are constantly looking for cheap electricity in different parts of the world. Their fierce competition is reflected not least in the mining difficulty, a measure of computing power in Bitcoin mining, which is currently higher than ever before.

"With the mid-April cut in half, miners' revenues will drop significantly, leaving some of them facing negative margins," said Ethan Vera, COO at mining services provider Luxor Technology.

The proof-of-work consensus mechanism has many critics because of its high energy requirements, but also enthusiastic proponents. In a interview with the German BTC-ECHO EU Commissioner Dr. Joachim Schwerin explained why the PoW approach represents the maximum achievable decentralization in the crypto sector.