Only 1000 blocks left before Halving. Will it boost the price of bitcoin? Or not… What will be the impact for the Mining industry?
Rise or fall in bitcoin post Halving?
It goes without saying that a reduction in the supply of bitcoins can only be bullish. But we will not have a sudden rise in bitcoin. For three reasons.
The first is the good old saying: “Buy the rumor and sell the news”. We recently demonstrated this with ETFs.
The second is related to the volumes of bitcoins mined compared to the trading volumes. We will go from 900 BTC mined every day to 450 BTC. That is to say much less than the daily volumes which reach 24,000 BTC on average.
Half of the 21 million bitcoins were produced in the first four years. Then an additional 25% during the second cycle, 12.5% during the next cycle and 8.4% during the last cycle which will end on April 19.
And only 4.2% of the 21 million bitcoins will be produced over the next 210,000 blocks. In other words, this halving will clearly be less spectacular than the previous ones.
Third, a lot will depend on what the miners do. Certainly, many miners systematically sell 100% of their bitcoins. The supply will therefore necessarily drop from these “natural” sellers that are the miners.
But heavyweights such as Cleanspark, Riot or Marathon are far from selling their entire harvest. The supply of bitcoins from these behemoths should therefore not change.
All that being said, halving is absolutely not a non-event. These 450 bitcoins per day represent 12 billion dollars per year. That is exactly the net amount absorbed by ETFs since January 11, with a 60% appreciation of bitcoin as a result!
In short, the impact of halving is exponentially weaker, diffuse, but still significant.
Increase or decrease in hashrate?
The hashrate dropped by 25%, 11% and 25% immediately after the first three halvings. It is certain that we will see a drop next week.
JP Morgan analysts expect a drop in 13%. CleanSpark CEO Matt Schultz believes the hash rate will collapse by 30%.
For what ? Because many ASICs will no longer be profitable. For example the Antminers S17, or even the S9.
At $0.08 per kWh, the S17 will need $108,000 bitcoin to make money. An S9 will need an electricity price of $0.02 and bitcoin over $63,000 to be profitable.
On this subject, don’t miss our article: Bitcoin – Which ASICs will remain profitable after Halving?
All inefficient machines will permanently disappear from circulation. Hence the anticipation of a drop in hashrate which will certainly be short-lived.
We can bet that we will return to the highest level in less than two months. The industry is booming with around 70% of the hashrate deployed after January 2022. We are now well above 600 EH/s:
Miners must be smart
Data from CoinMetrics shows that most of the industry currently runs on relatively inefficient ASICs like the Antminer S19J Pro. Post halving, this model will need an electricity price below $0.05/kWh to maintain attractive margins.
Bitmain's launch of its new ASICs (S21, T21 and S21 Pro – each with an efficiency of less than 20 J/TH) comes just in time for the halving.
At $70,000 for one bitcoin, the S21 remains profitable even with a kWh at $0.14. In other words, it is impossible to mine in France, even with the latest generation models.
Also note that MicroBT Whatsminers perform better than Bitmain Antminers in higher or lower than average temperature conditions.
Our article on this subject: Bitcoin – Whatsminer M60 vs Antminer S21.
Buying the most recent ASICs is obviously recommended. Ultimately, these machines earn you more sats. But this is not a viable strategy. Anyone can buy these ASICs, but not everyone benefits from cheap electricity.
Another strategy is to overclock using immersion cooling. It is then possible to increase the production of an S19 Pro from 104 TH/s to 140 TH/s, or +34%. Cleanspark even offers gains of up to 85%:
A third strategy is to exploit the heat generated by ASICs. For example to heat water for a fish farm. The possibilities are numerous. Minor Jaran Mellerud explain :
“In Finland, we have diversified our revenue streams by selling the heat produced by our ASICs to a district heating system. We also receive money for our contribution to stabilizing the electricity network by relieving the network during peaks in consumption. These ancillary sources of income significantly strengthen the profitability of our activities. »
We can bet that miners will be full of ideas to improve their margins. The halving is merciless…
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