Bitcoin's Upcoming Halving: How it Could Drive BTC Price above $80,000 for Profitable Mining
Summary:
The Bitcoin halving event, which occurs approximately every four years, halves the block rewards for miners and significantly impacts Bitcoin's price and mining activity. With the upcoming halving slated for April 20, mining costs, using tools like Antminer S19 XPs, are expected to rise from $40,000 to $80,000, necessitating a BTC price above $80,000 for mining operations to remain profitable. Historically, BTC prices have seen significant increases following each halving event. Despite fears of bankruptcy, miners have consistently remained profitable and are likely to do so, given a reduced market supply coupled with an increase in demand.
Every 210,000 blocks, or roughly every four years, Bitcoin (BTC) goes through a key event known as the halving. This event slashes the block reward that miners receive in half. As a result, not only does it indirectly affect the BTC price, but it significantly influences miner’s activity as their mining expenses double, making it cost twice as much to gain the same BTC reward.
CryptoQuant's CEO, Ki Young Ju, shared data demonstrating that the current mining cost using Antminer S19 XPs will ascent from $40,000 to $80,000. This increased cost is balanced due to the BTC price rising after the halving.
After the halving that took place in May 2020, the profitable price for miners to sustain mining climbed to over $30,000. Concurrently, the BTC price attained a new height of $69,000 in the same cycle.
The average cost of mining Bitcoin is $49,902 with the current BTC price sitting above $70,000. Once the halving occurs on April 20th, the average cost to mine Bitcoin will surpass $80,000. Therefore, for miners to keep their operations running, the BTC price needs to surpass $80,000.
In the past, the prices of BTC have experienced substantial growth after each halving event. Post the 2012 halving, the Bitcoin price rose by about 9,000% to $1,162. After the 2016 halving, the price climbed approximately 4,200% to hit $19,800. After the last 2020 halving, it rose nearly 683% to reach $69,000.
Consequently, miners have consistently made profits despite concerns about potentially going bankrupt after each halving event. These events also render several mining machines redundant, unable to meet the increased demand for high hash power.
Following each halving, there is a period of uncertainty when the cost of BTC remains under the profitable price for miners. This time is marked by increased sales of mining rigs and small or independent miners often being forced to shut down. However, with a reduction in market supply combined with an increased demand, the price eventually recovers and generally rises above the average mining costs, making operations viable again for miners.
Published At
4/8/2024 1:13:22 PM
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