Bitcoin Miners Near Final Month Before Reward Halving Slashes Revenues

Bitcoin’s price has remained above $60,000 throughout March, reaching close to $74,000 on March 14. Between on-chain fees and the price increase, these factors could offset revenue losses from the halving for miners. However, the halving will make mining much less profitable, particularly for those with high operational costs, potentially leading some to cease operations.

Bitcoin’s 11th Hour — Miners Brace for Upcoming Reward Cut
Bitcoin’s inflation rate is set to significantly decrease around April 20, 2024, as the fourth halving event reduces miner rewards from 6.25 bitcoins per block to just 3.125. To provide perspective, if the halving took place last year on April 20, 2023, with bitcoin priced at $28,245 each, the scenario would be vastly different. At that time, miners generated approximately $25.42 million daily by mining around 900 BTC. However, post-halving, with only 450 BTC being mined, revenues would have dropped to about $12.71 million.

Currently, bitcoin hovers slightly above the $67,000 mark, translating to daily earnings of $60.3 million from block rewards alone, not including transaction fees. Should the price maintain its current level, the halved daily output of 450 BTC could still net miners $30.15 million, surpassing the $25.42 million earned from 900 bitcoins in April last year. Additionally, miners now earn more per transaction, with the average fee jumping to $8.28 or 37.7 satoshis per virtual byte from April 2023’s $2.05 per transfer.

Given the current price is double that of April 2023 and fees have quadrupled, well-established mining operations stand to remain profitable if these trends continue or greatly improve. However, a dip in bitcoin’s price to $50,000, $40,000, or below $30,000 could significantly impact miners’ profitability. Traditionally, halving events have been followed by rises in BTC’s price over the medium to long term, always compensating for the diminished block rewards.

Historically, each halving has also been succeeded by a price increase, yet it’s vital to acknowledge that market cycles may not always replicate past patterns. As the ecosystem braces for its next halving, the current backdrop of fluctuating prices and fees paints a complex picture for miners. The interplay between potential revenue streams and the current uncertainty of crypto market values underscores a pivotal moment. The fourth halving may not only test the resilience and adaptability of miners but also set a precedent for the digital currency’s trajectory going forward.

What do you think about the upcoming halving? Do you think prices and fees will offset the reward loss miners will see in 34 days? Let us know what you think about this subject in the comments section below.