It has been predicted that the next Bitcoin halving would double the cost of mining one BTC to $40,000, thereby forcing many miners out of the market.
According to a Bloomberg story from July 8, miners might see their revenues take decline after the next Bitcoin (BTC) halving in April 2024.
The term “Bitcoin halving” refers to the halving of Bitcoin’s mining earnings every four years. Bitcoin halvings have always been followed by significant price increases, thus the event is well received by traders.
In the near future, the Bitcoin mining incentive will be halved, from its current 6.25 BTC to 3.125 BTC. In the past, Bitcoin miners have increased their efficiency to compensate for the loss in mining profits with each halving.
Bitcoin miners have benefited from the recent price increases since they have been able to liquidate their assets at a premium. The research warned that next year would be much worse as miners face rising power bills and mounting debt.
According to Bloomberg, Jaran Mellerud, crypto mining expert at Hashrate Index, over half of Bitcoin, miners are not operating at peak efficiency. So, following the next halving, these miners will likely be in a tough position.
Mellerud predicted that the most popular mining equipment will only need $0.06/kWh in power costs to break even, down from $0.12/kWh. About 40% of BTC miners, he noted, had an electricity cost of more than $0.06/kWh.
As a result, Mellerud said, miners with running expenses higher than $0.08/kWh and those without mining equipment will be hit particularly hard by the reduction.
Research division head of mining consultancy BlocksBridge, Wolfie Zhao of TheMinerMag, said: “When all factors are considered, the cost for certain miners is far higher than Bitcoin’s current pricing.” Many miners will see a decline in net income due to inefficient operations.
Profits are also being reduced since many of the larger mining companies are still working to decrease their debt. According to projections from Luxor Technologies’ COO Ethan Vera, the worldwide mining industry’s debt has decreased from $8 billion in 2022 to between $4.5 and $6 billion now.
Competition among miners is increasing as mining difficulty reached a record high in June. According to Foundry’s senior vice president Kevin Zhang, in order for miners to keep making the same amount of money next year, BTC prices would need to jump between $50,000 and $60,000.
According to Q1 2023, statistics from TheMinerMag, the cost to mine one BTC for 14 publicly traded miners ranged from $7,200 to $18,900. According to projections from JPMorgan, the cost of mining Bitcoin would quadruple to about $40,000 after the halving.
