Bitcoin halving: a threat to miners?

The Bitcoin halving is a major event in the cryptosphere. Good news for some, it could unfortunately have devastating consequences for minors.

Miners at risk from the Bitcoin halving

The Bitcoin halving and its well-known historical repercussions

The Bitcoin halving is a crypto event that takes place every 4 years. It is based on a simple principle: halve the mining rewards.

Generally, the Bitcoin halving is accompanied bya phenomenal price increase. After the Bitcoin halving of 2012, for example, the price of BTC increased by 8,450% in one year. In 2016 and 2020, the price of this crypto showed an increase of 290% and 560% respectively (still over a period of one year).

Challenges awaiting miners

According to several studiesthe next Bitcoin halving will reduce mining rewards from 6.25 BTC to 3.125 BTC. Several facts justify this significant deficit:

  • Nearly half of bitcoin miners feature less than normal efficiency. This puts them in a delicate position after the next halving.
  • The cost of electricity for mining machinery could increase from $0.12/kWh to $0.06/kWh. Still, around 40% of miners operate with a cost per kWh above $0.06. This therefore increases their vulnerability. It also makes less profitable operations.
  • The total debt of the global mining industry is currently estimated at between $4.5 billion and $6 billion. This puts additional pressure on miners’ profit margins.

That’s not all ! Competition among miners is also reaching all-time highs, with mining difficulty steadily rising. Some experts believe that the price of bitcoin will have to reach between $50,000 and $60,000 next year for miners to maintain their profit margins.

Almost all the predictions therefore come together: after the Bitcoin halving, many miners could be forced out of the market. For survive in this complex landscapeit will not only be necessary to adjust its strategy, but also to adapt to the new economic realities of the sector.

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