The halving of the Bitcoin block reward every four years is a market-anticipated bull market catalyst. The fourth halving is currently predicted to occur in April 2024. The block reward will be reduced from 6.25 Bitcoin (about $187,500) to 3.125 Bitcoin (about $94,000). However, this may be a death knell for some Bitcoin miners. The relationship between block rewards related to coin prices and capital costs such as mining power and equipment will become more complex.
According to Bloomberg on the 8th, Jaran Mellerud, an analyst at Hashrate Index Cryptocurrency Mining Analysis, predicts that nearly half of miners will suffer losses in the next halving due to lower mining efficiency and higher costs.
The most common miner’s break-even electricity price is expected to drop from 12 cents/kWh to 6 cents after the halving. Currently, about 40% of miners still have operating costs per kilowatt-hour higher than this.
Miners whose operating costs are higher than 8 cents will find it difficult to make ends meet, as will small miners who outsource rather than operate their own miners.
Bitcoin halving may cause miners’ net profits to fall into negative territory. Wolfie Zhu, head of TheMinerMag research institute under mining consulting company BlocksBridge, added that some miners’ total costs are far higher than the price of Bitcoin.
For many miners with lower operating efficiency, net profit will become negative.
Zhao estimated in June that the cost of listed mining companies for mining one bitcoin is between $10,000 and $15,000. Once halved, costs will double and the break-even point will reach $20,000-$30,000.
Kevin Zhang, senior vice president of mining strategy at DCG’s cryptocurrency mining company Foundry, said that in order to maintain the same profit margin for miners after halving, the price of Bitcoin must rise to $50,000-$60,000 next year.
Bitcoin computing power hits new high Currently, Bitcoin mining is becoming increasingly difficult. In addition to significantly rising electricity costs and increasingly heavy debt financing burdens, increasingly fierce competition among Bitcoin miners is also compressing profit margins.
Hashrate Index’s mining report on the 9th showed that the average seven-day hash rate of Bitcoin reached a historical high of 401EH/s over the weekend. The average value for seven days rose by 8.5% per week to 398EH/s and rose by 18% per week for three days to reach 444EH/s. Since mid-June, in response to heat waves causing soaring electricity prices, the second-largest state in the United States has restricted operations by Bitcoin miners in Texas, leading to a decline in Bitcoin computing power. However, after entering July, computing power has returned explosively.
The report predicts that the growth rate of computing power at the next difficulty adjustment (about once every two weeks) will be very large and may soar again by more than 7.5%. Hashprice (factors affecting miner income include Bitcoin price, Bitcoin block rewards, pool fees and other factors), which is often used to measure miner income. It may fall below $70/PH/day at the next difficulty adjustment.
In terms of mining difficulty, BTC.com data shows that the next difficulty increase will be 4.93% to 53.14T, breaking through the historical high of 52.35T on June 14.
According to f2pool data calculated based on Taiwan’s benchmark electricity price of US$0.1 per kWh only 13 miners have not reached shutdown coin prices. The Ant S19 XP model has a daily net profit of about US$3.1 based on an electricity price of US$0.1 per kWh. Based on an estimated S19 XP market price of US$4,653 it would take more than four years to break even if you enter now.
The rise in bitcoin mining difficulty and the upcoming halving of block rewards will be a serious blow to all bitcoin miners. Large-scale miners are also trembling with fear and preparing for war by obtaining pricing from power suppliers in advance and increasing funds and reducing investment. Tiffany Wang CEO of Lotta Yotta a Texas-based bitcoin miner predicts that many miners will be driven out of the market during halving activities.
Also recently several bitcoin mining companies’ stocks have risen significantly with Riot Plateforms (RIOT) up 14.33%, Stronghold Digital Mining (SDIG)