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  • Writer's pictureConnie Chan

"Bitcoin Halving Excites Traders, Devastates Miners"


"Bitcoin Halving Excites Traders, Devastates Miners"
"Bitcoin Halving Excites Traders, Devastates Miners"

The highly anticipated Bitcoin halving event is approaching, expected to occur within a year. However, this event is also causing concerns among miners who fear they may not be able to sustain their operations due to potential increases in costs.


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The Bitcoin Halving Dilemma

Bitcoin halving, also known as the "halvening," is an event that occurs every four years where the reward for Bitcoin mining and the rate of releasing new BTC into circulation is cut in half. This reduction in reward helps to control the supply of Bitcoin in the market and prevent inflation.


The halvening has historically led to a surge in the price of Bitcoin, with the rest of the market following close behind. However, it's important to note that the parabolic growth in the value of Bitcoin is not guaranteed, as the four-year cycle events are affected by other factors.


Mining Bitcoin involves solving complex cryptographic hash puzzles to verify blocks of transactions that are updated on the decentralized blockchain ledger. While advancements in mining technology have alleviated the cost, the next halving is expected to be more costly than before, with nearly half of the miners suffering due to less efficient mining operations with higher costs.


Smaller miners who outsource the operation of their mining rigs, as well as miners with running costs above 8 cents per kilowatt-hour, will find it difficult to survive. The price of electricity at which a miner can still make a profit is expected to fall from 12 cents to 6 cents per kilowatt-hour, making it a rarity in most places.


Overall, the halving is expected to have a significant impact on the mining industry, with many miners struggling to maintain profitability. The price of Bitcoin has increased significantly in recent months, but rising electricity prices and production costs have caused some miners to cease operations.


"Bitcoin Halving Excites Traders, Devastates Miners" Miners Brace for Financial Impact

The mining industry has experienced a rise in Bitcoin miners, leading to a reduction in profit margins and a significant increase in mining difficulty. According to btc.com, the mining difficulty, which is a measure of the computational power needed to generate Bitcoin, reached an all-time high of 52.35T in June. "Bitcoin Halving Excites Traders, Devastates Miners"


Mining Difficulty | Source: btc.com
Mining Difficulty | Source: btc.com

Bitcoin miners currently mine at a cost of $10,000 to $15,000 per bitcoin, according to Zhao. With the upcoming halving, these costs will double, raising the miners' breakeven point to $20,000-$30,000. To maintain the same profit margins after the halving, Bitcoin will need to increase to $50,000-$60,000 next year, says Kevin Zhang, senior vice president of mining strategy at cryptocurrency mining company Foundry. To mitigate potential losses, miners are taking measures such as securing power prices, reducing investments, and building war chests to ensure they have enough capital to run operations. Some miners may be forced out of business if they can no longer turn a profit, potentially balancing out the equation until the next halving.


Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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