Summary:
• This year’s Bitcoin halving will reduce mining rewards to 3.125 bitcoins, posing a challenge to miners’ profitability.
• CryptoQuant reports that hash prices for miners have fallen 30% since the last halving and are expected to fall further.
• As competition intensifies and costs rise, the Bitcoin network hash rate has reached 600 EH/s, affecting profits.
In about 10 days, the Bitcoin community will witness a major event, the Bitcoin halving, which will slash the reward for mining a Bitcoin block from 6.25 bitcoins to 3.125, putting pressure on miners’ profitability.
Miners are now in a race against time and need higher Bitcoin prices to maintain their revenue.
Why Bitcoin Miners Will Face Challenges
According to a report shared by CryptoQuant with BeInCrypto, the price of hashrate for miners has dropped 30% since the last halving in May 2020. Currently, each Terahash is worth $0.11 per second, and this is expected to drop to $0.055 after the halving, assuming stable market conditions.
CryptoQuant explains that “the hash price is the average revenue a miner receives for each attempt to mine a valid Bitcoin block.”
Additionally, Bitcoin transaction fees have seen a sharp decline. They have dropped by 90% from 412 BTC per day in mid-December 2023 to just 29 BTC per day. Currently, transaction fees account for only 3% of total block rewards, down from 37% in mid-December 2023.
Meanwhile, competition among miners has reached unprecedented levels. The network’s hash rate, a measure of Bitcoin’s total computing power, has surged to around 600 exahashes per second (EH/s), a nearly fivefold increase since the last halving.
This surge means miners have to expend more effort and resources to mine the same amount of Bitcoin, with the cost of mining, or hashcoins, increasing tenfold since May 2020.
To meet these challenges, some miners have stepped up their sales of Bitcoin. For example, in late March, daily sales to over-the-counter (OTC) counters reached 1,600 Bitcoins, the highest since August 2023. At the same time, the amount of Bitcoin reserves held by miners has continued to decline over the past year.
A massive sell-off by Bitcoin miners could indeed put pressure on Bitcoin prices.
Despite these difficulties, not all mining companies are struggling. While major players like RIOT Platforms, Core Scientific, Bitfarms, and Marathon Digital reported a decline in Bitcoin production, CleanSpark saw growth. This change highlights market dynamics and operational issues that can have different impacts on mining companies.
However, Sheraz Ahmed, managing partner at Storm Partners, offered a different view, arguing that mining does not need to make special preparations for the halving because market forces will eventually stabilize the situation.
Ahmed told reporters, “Miners get less bitcoin for similar mining volume, but the price should reflect that, or the hash rate can adjust itself and become almost a perfect market. Any difference can be rebalanced. It’s similar to gold, so I don’t think you need to prepare more for it.”
Ahmed told reporters: "Miners get less bitcoin for the same amount of mining work, but this situation should be reflected in the market price, or the hash rate will adjust itself to achieve balance, almost forming an ideal market. Any imbalance can be corrected in this way. This is similar to the situation with gold, so I don't think people need to make too much special preparations for this."
Past halving events support Ahmed’s view. Bitcoin mining revenue hit a new high in 2024, reaching a record high of $79 million on March 6 and currently stands at $67 million. This is 3.5 times the revenue on the eve of the halving in May 2020.
These numbers suggest that despite the immediate challenges, the industry may find a new equilibrium after the halving. #德意志银行 #比特币恐慌