Bitcoin Miners to Face $10 Billion Blow from Halving

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Based on a recent Bloomberg report, Bitcoin miners are projected to experience over $10 billion in losses following the upcoming halving event, scheduled to occur within the next four and a half days.

Mining new blocks in Bitcoin will now only bring a reward of 3.125 BTC instead of the previous 6.25 BTC.

Mining companies with above-average expenses are braced for a significant setback due to the upcoming reduction.

In the past, miners have bounced back after the reduction in block rewards due to price surges, or bull runs, that occurred following each halving event. For instance, according to Chainalysis, miners had been accumulating cash before the first two halvings in 2012 and 2016. However, this trend did not hold true prior to the third halving in 2020. Given Bitcoin’s history following the previous mining cycles, miners chose to wait longer before selling their reserves, expecting higher prices.

In this latest round, mining pool balances have dropped by over 20% collectively. However, this decrease is less dramatic compared to the first two Bitcoin halvings. Interestingly, Bitcoin’s price hitting a new record high right before halving gave miners the confidence to sell some of their holdings in preparation for the potentially challenging effects of the halving event.

A double-whammy 

In addition to the Bitcoin halving, miners face increasing competition from AI firms in the mining industry.

The CEO of Core Scientific, Adam Sullivan, has pointed out that power supply has become significantly limited in the US.

Large tech companies such as Amazon are prepared to invest vast sums of money on building data centers. As a result, it may become more challenging for miners to find and secure affordable energy contracts.

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2024-04-15 09:23