Bitcoin halving brings ‘effective’ BTC mining costs to $30,000 ScrgruppEn

New research warns that Bitcoin (BTC) arrangements are boosting miner profits, but “income pressures” loom.

In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode And he expected New problems for miners after the next block support for Bitcoin was halved.

Impact of Bitcoin halving on miners could be ‘severe’

Competition in the Bitcoin mining space is increasing, with the hash rate – the estimated combined processing power deployed in the blockchain – reaching record levels.

For Glassnode, this signals unprecedented circumstances for miners trying to make a living at current BTC price levels.

Ordinal patterns help, as they act as a “filler” that turns empty block space into a source of income for miners.

“Naturally, as demand for block space increases, miner revenues will be positively impacted,” she wrote.

Bitcoin Average Hash Rate (7-day moving average) chart (screenshot). Source: Glassnode

The percentage of income received from fees is up between 1% and 4% compared to the lows seen in Bitcoin bear markets, but remains modest by historical standards.

“At the same time, the amount of hashrate competing for these rewards has increased by 50% since February, as more miners and newer ASIC platforms are created and come online,” The Week On-Chain notes.

This rise in hash rate lays the foundation for the upcoming showdown. In April 2024, miner rewards per block will decrease by 50%, doubling the so-called “production cost” of each bitcoin. Currently around $15,000, this would exceed $30,000 – above the current spot price.

Glassnode has provided two models to estimate the price at which miners, in aggregate, fall into the red, with the above version compared to mining difficulty.

“With this model, we estimate that the most efficient miners on the network have an acquisition price of around $15.1K,” the researchers explained.

“However, the purple curve shows a ‘doubling’ of this level after the halving to $30.2k, which will likely put the majority of the mining market under severe income pressure.”

Bitcoin difficulty per issue pricing model (screenshot). Source: Glassnode

A previous model put the average miner acquisition price at $24,300 per bitcoin — about 8% below the spot price as of September 28.

Bitcoin difficulty regression model (screenshot). Source: Glassnode

BTC price incentives

Others are more optimistic about how miners will handle the halving period.

Related: Bitcoin Exchange Volume Tracks to 5-Year Lows, as Fed Inspires to Hold BTC

In an interview with Cointelegraph this month, analyst Philpphilp, co-founder of trading group DecenTrader, confirmed that miners will increase their Bitcoin accumulation ahead of the event.

“Miners are incentivized to ensure prices are well above marginal cost before the halving,” he wrote in a series of tweets on X (formerly Twitter) in August.

“Whether they consciously collude, or not, they are collectively incentivized to raise prices before their marginal revenues actually halve.”

BTC/USD chart with miner accumulation data. Source: Filbfilb/X

Helping the dynamics of Bitcoin supply will be what Filbfilb calls smart money “buying the rumor” during the halving and its impact on the amount of Bitcoin being minted.

This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.

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