New research warns that Bitcoin serial numbers are boosting miner profits, but “revenue pressure” is looming.
In the latest edition of its weekly newsletter “A Week on the Chain,” analytics firm Glassnode expected After Bitcoin’s next block subsidy halving, miners face new problems.
Bitcoin halving impact on miners could be ‘severe’
Competition among Bitcoin miners is exploding, with the hash rate (the estimated combined processing power deployed to the blockchain) hitting an all-time high.
For Glassnode, this shows that miners have unprecedented conditions to stay afloat at current BTC price levels.
“Of course, as the demand for block space increases, miner revenue will be positively affected,” it wrote.
The proportion of revenue coming from fees is up 1% to 4% compared to the lows during the Bitcoin bear market, but is still modest by historical standards.
“At the same time, as more miners and newer ASIC equipment are established and come online, the amount of computing power competing for these rewards has increased by 50% since February,” “On-Chain Week” noted.
The surge in computing power sets the stage for the coming showdown. By April 2024, miner rewards per block will drop by 50%, doubling the so-called “production cost” of each BTC. The current price is around $15,000, which would be $30,000 higher than the current spot price.
Glassnode proposed two models to estimate the price at which miners collectively lose money and compared issuance to mining difficulty.
“Using this model, we estimate that the acquisition price of the most efficient miner on the network is approximately $15,100,” the researchers explained.
“However, the purple curve shows that level ‘doubling’ to $30,200 post-halving, which could put most of the mining market under severe revenue pressure.”
Previous models put the average miner acquisition price at $24,300 per Bitcoin, about 8% lower than the spot price on September 28.
Bitcoin price incentives
Others are more optimistic about how miners will respond to the impact of the halving.
Related: Fed encourages Bitcoin holdings, Bitcoin trading volume hits five-year low
In an interview with Cointelegraph this month, analyst Filbfilb, co-founder of the trading suite DecenTrader, reiterated that miners will increase their BTC accumulation ahead of the event.
“Prior to the halving, miners will be incentivized to ensure prices are well above marginal cost,” he wrote in an X (formerly Twitter) post in August.
“Whether they consciously collude or not, they are collectively incentivized to push prices higher before marginal revenue is effectively cut in half.”
Filbfilb says smart money is “buying the rumor” on the halving and its impact on BTC minting volume will help BTC’s supply dynamics.
This article does not contain investment advice or recommendations. Every investment and trading activity involves risks, and readers should do their own research when making decisions.
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