6 ways the halving will affect Bitcoin mining

Contrary to popular belief, this halving probably won't significantly reduce the network's hashrate. After Bitcoin's first three halvings, the hashrate plummeted by 25%, 11%, and 25%, and many analysts and miners expected (or expected?) a similar hashrate drop this time around. ) seems to be the case.

I agree too Penniser's prophecy The upcoming Bitcoin halving is expected to result in a slight drop in hashrate in the range of 5-10%. This prediction also hash rate indexremains at 3-7%.

This cautious prediction is based on the current high profitability of Bitcoin mining due to high prices, approximately 70% of Bitcoin's hash rate will be introduced after January 2022, and the mining economics currently expected after mining. It derives from the observation that the system operates under conditions that are less favorable than those in which it operates. -Half reduction.

Moreover, the hashrate is expected to recover quickly from this slight decline. Over the past three halvings, the network has recovered its pre-halving hashrate levels within an average of 57 days. This trend highlights the following important aspects: Halving should not be viewed as an event that reduces hashrate, but rather as a temporary halt in hashrate's relentless upward trajectory.

The robustness of the hashrate is further strengthened by miners' continued efforts to update their equipment with the latest and most efficient models. This strategy not only offsets short-term declines in hashrate, but is also likely to lead to significant increases in hashrate in the coming months.

In essence, the upcoming Bitcoin halving is likely to be a temporary stagnation in the network's hashrate trajectory rather than a significant setback.

data from coin metrics It highlights that most of the industry is currently running on relatively inefficient machines like the Antminer S19J Pro. These miners require operating costs of $0.05/kWh or less to maintain healthy gross profit margins after the halving.

However, as you can see below, the average hosting price in the US is just under $0.08/kWh. hash rate indexmany U.S.-based miners will face cash flow challenges after the halving and may be forced to make major fleet upgrades.

Bitmain has begun launching new machines such as the S21, T21, and S21 Pro, each boasting an efficiency of less than 20 J/TH, just in time for the halving. This development has many US-based hosting providers urging their customers to switch from his S19J Pro to his S21 model. Given the high cost of hosting in the US, this push seems more a necessity than a choice.

Looking at the chart above, it is clear that the S19J Pro model is unlikely to generate positive cash flow when hosted at $0.08 per kWh, considering that Bitcoin's direct production cost is $75,000. is. Therefore, miners facing increased operating costs must migrate to more efficient hardware, such as the Antminer S21 or similar models, in order to maintain profitability.

Upgrading to the latest machines allows you to continue operating in high-cost environments, but it is not a realistic long-term strategy. The need to continually update hardware, often before previous investments are recouped, emphasizes that such approaches are unsustainable.

My underlying message is clear. If you have to use the latest generation of hardware to stay cash flow positive, your operating costs are too high.

Bitcoin mining is one of the most free and competitive markets in the world, one that Adam Smith himself would admire. This inherent competitiveness drives the constant pursuit of innovation, especially during difficult times such as halving. In response to pressure from halving, miners are adopting some of the most creative strategies to maximize the utility of existing resources.

One such strategy is underclocking. This is a process that reduces the power consumption of machines, making them more energy efficient and reducing costs. This process can be facilitated by third-party firmware such as: LuxOS, the efficiency of the machine will be greatly improved. This is an important adaptation in environments with thin margins. It seems that the movement towards underclocking will further accelerate.

Moreover, the pursuit of improved profitability extends beyond operational adjustments to new revenue-generating approaches.A convincing example is: hash love In Finland, we are working on a project that leverages several revenue sources to increase mine profitability.

In Finland, sources of income include selling waste heat from miners to district heating systems, contributing to grid stabilization and earning fees, and strategically selling power back to the market during periods of high spot prices. We are diversifying. These ancillary revenue channels have significantly increased the profitability of our mining operations.

The upcoming halving will act as a catalyst, encouraging miners around the world to imitate Hushlab by exploring and implementing creative strategies to increase their profits.

The intense competition that characterizes the current state of the mining industry has prompted many, especially public miners, to explore new horizons. There is a growing movement towards AI computing, with companies like Iren and Hive Digital Technologies leading the way.

The trend towards diversification is expected to gain further momentum in the difficult coming months. However, trends in the mining industry are cyclical. Bull market predictions for 2025 portend a reversal of this diversification trend. With Bitcoin's value likely to rise, miners are putting diversification strategies aside in favor of maximizing profits from mining, and are jumping back into the fray with renewed vigor to extract value from every hash. I might jump in.

This shift between diversification and intensive mining reflects the broader rise and fall of the market. A miner's strategy evolves with the market, balancing between seizing immediate opportunities in new industries and preparing for the next rise in Bitcoin mining profitability.

Currently, the United States accounts for a significant portion of the global hashrate, accounting for 40%, with China and Russia also major players, contributing 15% and 20% respectively. However, the industry is gradually moving towards a more globally distributed model, driven by the constant pursuit of cost efficiencies, especially cheap electricity.

As miners prepare for the upcoming halving, many are exploring emerging mining markets in Africa, Latin America and Asia, where electricity is very cheap. For example, Bitfarms is making strides in Argentina and Paraguay. Bitdeer is expanding its production capacity in Bhutan. The marathon enters the United Arab Emirates and Paraguay.and hash love provides hosting solutions in Ethiopia.

The impending halving event acts as a catalyst for hashrate transition, forcing miners to venture beyond developed countries to secure more economical sources of power. This move towards more geographically distributed mining networks is poised to have a major positive impact on Bitcoin. By distributing hashrate more evenly around the world, Bitcoin mining is not only less susceptible to local regulatory risks and fluctuations in power costs, but also more closely aligned with the decentralized ethos that underpins Bitcoin itself. We will be collaborating with.

The upcoming Bitcoin halving is being eagerly awaited as a potential trigger for the next bull market. However, given that the current annual issuance rate is already at a meager 1.6% and that almost 94% of all Bitcoins are already in circulation, the expected supply shock from this halving will be The impact on prices is expected to be minimal.

The impact of negative supply shocks during previous halvings was significant, with annualized issuance plummeting from 25% to 12.5% ​​in the first half, and from 8.4% to 4.2% in the second half. did. However, for the upcoming half-life, the decrease from 1.6% to 0.8% is not a significant change compared to the dramatic changes observed in previous cycles.

Please don't misunderstand my position. I still expect a bull market to occur in the wake of this halving. However, an increase in demand, rather than a slight decrease in supply, will be the main factor driving the price hike.

like Dylan Leclaircompares the halving to a “global advertisement,” suggesting that the main impact on Bitcoin's price will not be a direct result of a reduction in supply, but rather the media attention and investor enthusiasm it generates. This suggests an increase. This increased awareness could stimulate demand and turn the halving into a self-fulfilling prophecy of bullish market sentiment.

This perspective is also consistent with the following insights: daniel polotsky Questioning the continued relevance of Bitcoin's four-year cycle. Demand will continue to fluctuate, but the effects of changes in supply are becoming increasingly negligible.

At the moment, the rate of Bitcoin issuance is so low that its supply has little impact on the price, which is currently primarily driven by demand. While the narrative surrounding the halving remains a strong driving force and is expected to push Bitcoin into a new bull market, this influence is likely to diminish in the future. As a result, Bitcoin is likely to eventually decouple from the four-year halving.

I have great memories of the 2020 halving. As the block subsidy halving approaches, the atmosphere within the Bitcoin community is filled with anticipation and excitement. This pivotal event sparked an incredible bullish wave throughout the summer of 2020, setting the stage for a monumental bull market in 2021. I remain skeptical that this small drop in supply from this halving will significantly change Bitcoin's price equilibrium, but I look forward to seeing it increase demand and investor enthusiasm. .

From a miner's perspective, the halving indicates more than just the potential for market upside. It's an opportunity to introspect and innovate our operations. This has led them to explore new methodologies to reduce costs and increase efficiency, ensuring survival and success in this competitive field. The halving is not just a test of resilience, but also a catalyst for evolution within the mining community.

As we look forward to the next halving, it is essential to remember Bitcoin's core ethos. Bitcoin was not created for miners. Its heart beats for Hodlers. Miners undoubtedly play an important role in servicing the Bitcoin network and ensuring its robustness. But the true spirit of Bitcoin lies in its ability to empower its holders and provide a decentralized alternative to the traditional financial system. The anticipation and excitement surrounding the halving resonates not only among miners, but throughout the Bitcoin enthusiast and investor community.

So, as this pivotal event draws ever closer, let us embrace the halving with open arms and a spirit of innovation. This is a reminder of Bitcoin's dynamic situation, evidence of its resilience, and a harbinger of exciting developments to come. Hodlers and miners alike, get ready for the halving. bring it on!