There's a lot of buzz around the upcoming bitcoin halving, especially from HODLers, but miners seem to be feeling differently. The halving is great for those holding bitcoins since it boosts investment returns. However, for miners, it means their rewards are getting slashed in half.
I bet a lot of miners are also holding onto some bitcoins and will still gain from this halving in a roundabout way. But am I off base here? Are there any pure miners out there who rely solely on mining rewards for their expenses and aren't holding any bitcoin?
What do you think are the best ways for miners to get ready for the halving?
If the event increases the profit of holders then the value of the halved mining reward will also increase.
For comparison, miners earn 6.25BTC which is about $170,000 with the current bitcoin price of $27,000.
The halving will drop the reward down to 3.125BTC but if there is an increase in the market value of bitcoin to 3× (which is a conservative amount), the value of the mining reward then will be $255,000, which is significantly higher than the current value. The downside is that the bull run does not come with the halving but several months or a year after.
All miners invariably hold bitcoins since they are competing to win the mining reward. They need to cover operational cost regularly which will be affected by the halving.
I imagine there will be a temporary drop in hashrates if some rigs close down due to high operational cost and a halved reward. This will balance out after some time if the market enters a bull run.
Although I expect they will be preparing for it and have already started saving from their current gains.
- Jay -
It is true that miner rewards per block will drop 50% after bitcoin halving, but the average production cost per bitcoin will rise accordingly, which is about $15,000 while the price of bitcoin is about $27,000, which makes mining profitable.
Some estimates reported in Glassnode indicate that their model predicts that this average will rise to $30,000, which we can say that the price of Bitcoin will be above this price for the coming period or that the potential bottom of the price of Bitcoin in the future will be much higher than $30,000 for the near future.
there is no reason for mining companies to sell Bitcoin because mining will be profitable if the price rises above $30,000, but these estimates vary according to many variables.
Miners have several problems:
Bitcoin hashrate is constantly growing
New ASICs are appearing on the market
Halvings
Electricity prices rise every year
If you are 100% sure that Bitcoin will rise in price after the halving, then it is better to buy Bitcoin now.
Industrial miners cannot mine at a loss for very long. Industrial miners sell a portion of the bitcoins they mine to pay for their expenses, and the miners will only make a profit if they are able to keep the bitcoins. But in Bitcoin mining there is a lot of competition among global mining companies.
They actually make a profit. It is true that the amount varies depending on the company, electricity, expenses, and the nature of the loans, but in the end the average block mining costs are less than the price of bitcoin, and these companies do not base their profit and loss calculations on the future price of Bitcoin, especially since we may be talking about waiting for several years before price of Bitcoin actually begins to move. i.e, since the beginning of the year, we have been below $30,000.
At a price of 30,000 dollars, mining will be profitable, and the profit in mining will be much greater than in other areas of the business, unless the price of Bitcoin suddenly falls to 20,000 dollars. After the halving, large miners will be forced to update their equipment fleet in order to earn profit for the next 4 years.
How did you base your belief that it would be profitable? According to the above report, it will be equal to avg cost of mining, which varies greatly from one mining pool to another. Therefore, we cannot say that the price of 30,000 is profitable for everyone, and according to technical analysis, there are no major resistance levels after 31,900, so when it is broken This level we will reach ~38k-42k easily.
What do you mean by forced to update? If they can still make a profit wouldn't they continue to use the hardware for some time? I don't understand the urgency to upgrade the RIG if everything happens as you predicted. Not to mention new hardware profitability is not a guarantee. CMIIW.
Usually, bitcoin miners and bitcoin HODLers too, is there someone who immediately sells mined coins? If you are forced to immediately sell your coins to cover mining expenses, I think you shouldn't be mining. It's not a pre 2016 era.
To be honest, is there really any individual mining alone with a couple of equipment? Bitcoin mining is no longer profitable for individuals and I couldn't care less about how big companies prepare for the halving, except philipma from this forum. By the way, my assumption is that some miners sell hardware before the halving happens, put that profit into bitcoin or altcoins till the new miner is released by Bitmain or another company and they immediately buy it to mine and profit as much as possible till the difficulty increases further because of new, improved and more powerful miner.
You make it sound like the miners aren't wallowing in enough money already from all the transaction fees they are getting and they will get when the industry gets to another bull season next year. The rewards are halved, bitcoin will become more valuable, which means more people are going to use and transact with it, which means extra money for the miners. Will it be enough to cover for the profit that they are losing when the halving commences? I'm not sure myself it could depend on what rig they have and all other factors, but when the halving comes everybody wins so it's not like they are going lose a lot of money in the process. Besides, this has been a 4 year thing which will happen until the final halving comes in about 2140, so they better have prepared themselves for this eventuality.
If you see last two halvings then price of Bitcoin goes up after 17 to 18 month of halving.
2nd halving was on 9th July 2016 and Bitcoin saw its ATH of 19k$ on 19th Dec 2017.
3rd halving was in May 2020 and Bitcon saw its ATH of 69k$ on 10th Nov 2021.
Forth Halving is coming in April 2024. So there is chance of new ATH in Sep/Oct 2025.
It better to buy Bitcoin these days rather going for mining, its too expensive these days and only big one can afford it. One must calculate its ROI before jumping into mining. You not only expensive miners but must also be capable of paying for the high power they consume.
The profitability of Bitcoin mining quickly decreases with every Bitcoin halving, especially if the miner uses less effective hardware. Even now and then, miners are compelled to halt operations. Other investors are still making investments or purchasing useful equipment despite this predicament in order to keep their income steady.
Then, we know if there is a halving, the likelihood is great that the market price for Bitcoin will really rise, and we have already seen this happen frequently in this sector.
Nothing, it's a nature.
The miner wouldn't lose, but they will not earn as much as before in terms of solving a new block, when it comes to earn from verifying a transaction, it depends on how big or low people willing to pay for the fee.
So when Bitcoin difficulty get higher and higher, only big company that operated in cheap electricity are able to survive.
Industrial mining can only be done if electricity is cheaper than 4,5 cents, and the cheaper the electricity, the cheaper the equipment you can use. If your electricity costs 1-2 cents, then you can use used S17 ASICs and their analogues, or next year buy used S 19 ASICs, but there are few such places in the world.
Miners have several problems:
Bitcoin hashrate is constantly growing: mining hardware upgrades and operational efficiencies.
New ASICs are appearing on the market: stay up to date on the latest ASIC launch and be prepared to adjust your equipment.
Halvings: make sure your mining operations are as efficient as possible so you can save money in the long run.
Electricity prices rise every year: explore energy-efficient equipment and areas with lower electricity costs. use renewable energy sources to lower the costs.
It sounds quite pessimistic. But these problems will still not deter miners, who will continue mining anyway, because it will still be profitable.
That is why:
The nuance is that there will probably be fewer and fewer small farmers left.
By and large, no way. Well, unless you stock up on new, more powerful equipment (ASICs).
Already there are much fewer 'small farmers'.
It is a struggle to be competitive operating as a solo miner this days even with a reasonably large farm. The competition is very advanced and grows larger with more miners moving to profitable pools.
- Jay -