The next “Bitcoin halving”, which will take place in April 2024, could put miner profits in the red. And caused many miners to exit the Bloomberg market. reporton July 8
Every 4 years, Bitcoin’s mining reward is halved — this event is known as the Bitcoin halving. In the past, all Bitcoin halvings were followed by massive price spikes. Therefore, investors often welcome this event. In 2012, 2016 and 2020, the price of BTC increased by 8,450%, 290% and 560% in the one year after the halving.
The upcoming halving Mining reward will be reduced from 6.25 BTC currently to 3.125 BTC. Until now, BTC miners compensate for each mining reward loss by increasing the efficiency of miners.
The BTC price rally also benefits miners who can sell their mined coins at a large profit, however, reports indicate that things will be more challenging next year. As the mines deal with rising electricity costs and debt burdens.
Jaran Mellerud, crypto mining analyst at Hashrate Index, told Bloomberg that nearly half of Bitcoin miners are underperforming. Therefore, these miners are more likely to have to fight after halving.
Mellerud said that the break-even price of conventional miners is expected to drop from $0.12/kWh to $0.06/kWh after halving. However, he said about 40% of BTC miners operate at costs above $0.06/kWh.
Therefore, miners with operating costs above $0.08/kWh are likely to suffer a significant impact from the halving, according to Mellerud.
Wolfie Zhao, head of research at TheMinerMag, the research unit of mining consultancy BlocksBridge, said: “If you count everything, The total cost for some miners will be much higher than the current price of Bitcoin and the net profit will become negative.”
In Q1 2023, 14 miners spent between $7,200 and $18,900 to mine 1 BTC, according to data from TheMinerMag. show BTC halving could potentially double the cost of mining to about $40,000.
Lotta Yotta CEO Tiffany Wang believes that while all miners need to prepare for halving, “eventually more miners will be driven out of the market.”
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