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 miners.

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Bitcoin halving and its well-known historical repercussions

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

Typically, the Bitcoin halving is accompanied by a phenomenal price rise. After the Bitcoin halving of 2012, for example, the price of BTC rose by 8,450% in one year. In 2016 and 2020, the price of this crypto rose by 290% and 560% respectively (again over a one-year period).

Challenges ahead for miners

According to a study, the next Bitcoin halving will reduce mining rewards from 6.25 BTC to 3.125 BTC. Several facts justify this significant shortfall:

• Nearly half of all Bitcoin miners have a lower-than-normal efficiency. This puts them in a tricky position after the next halving.
• The cost of electricity for mining machines could rise from $0.12/kWh to $0.06/kWh. Yet around 40% of miners operate with a cost per kWh higher than $0.06. This makes them even more vulnerable. It also makes operations less profitable.
• 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.

And that’s not all! Competition between miners is also reaching record levels, with the difficulty of mining steadily increasing. Some experts estimate 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 predictions are therefore in agreement: after the Bitcoin halving, many miners may be forced to leave the market. To survive in this complex landscape, it will be necessary not only to adjust strategy, but also to adapt to the new economic realities of the sector.