What comes next after Bitcoin’s fourth halving? Continue reading to explore its economic and operational effects on the Bitcoin mining industry.
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The Bitcoin halving, a critical event, is set for April 19, 2024. Occurring every four years, this event will slash the block subsidy for Bitcoin miners from 6.25 BTC to 3.125 BTC, effectively halving the reward miners earn for their work. Historically, these halvings have triggered significant changes in the mining landscape, potentially affecting numerous economic and operational aspects of Bitcoin mining.
MARKET PREDICTIONS AND THE ECONOMIC OUTLOOK
The immediate result of the halving is a significant drop in miner revenue because of the smaller block subsidy. As a result, less productive miners might become unprofitable and leave the network, which could cause the hashrate to drop. If Bitcoin’s price stays at its current level, roughly 3-7% of the hashrate could go offline, according to Luxor’s Hashrate Index Research Team. However, depending on how Bitcoin prices and transaction fees develop after the halving, up to 16 percent of the hashrate might lose its economic viability.
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A crucial component of Bitcoin security, hashrate, may change in tandem with difficulty levels to reflect the new economic conditions. According to Luxor’s analysis, there exist various scenarios wherein the network’s hashrate, which takes into account adjustments to the new earning potential following the halving, could ultimately range from 639 EH/s to 674 EH/s by year’s end.
BREAKEVEN POINTS AND SIMPLE PRICING
The profitability of various ASIC models will become important after the mining reward is cut in half. If the price of Bitcoin does not rise significantly, only the most productive machines will be able to make a profit due to the lower rewards. Luxor, for example, projects that breakeven power costs for next-generation ASICs, such as the S19 XP and M30S++, could vary from $0.07/kWh to $0.15/kWh, contingent on post-Halving hashprice.
ASIC machine prices will probably increase as a result of this shift in profitability. Because of the strong historical correlation between hashprice and ASIC prices, a decrease in hashprice is expected to cause a corresponding adjustment in ASIC values. This may hasten the models’ withdrawal from the market, especially the older, less effective ones.
THE POST-HALVING ROLE OF CUSTOM ASIC FIRMWARE
Miners are increasingly using customized ASIC firmware to increase the hardware’s efficiency in an effort to combat declining profitability. Firmware such as LuxOS and BraiinsOS can improve machine performance by optimizing hashrate output and power consumption, thereby reducing the electricity breakeven point. By lowering its power consumption, underclocking an S19 with customized firmware, for instance, could increase its operational viability and sustain profitability even at lower hash rates.
Custom firmware is becoming more and more popular among public miners as a way to increase fleet efficiency. Businesses that have reported improving their operational efficiencies through the use of custom solutions include CleanSpark and Marathon. It is anticipated that this trend will intensify as more miners look to reduce expenses and increase output in the face of declining block rewards.
The 2024 Bitcoin Halving and What Follows
Like previous halvings, the 2024 Bitcoin Halving is expected to drastically alter the mining environment. Even though the precise results are unknown, there is no doubt that the event will bring opportunities as well as challenges. Miners who strategically plan, considering both operational efficiencies and economic forecasts, will be in a better position to handle the post-halving environment. In order to turn the halving event into an opportunity rather than a setback, those in the Bitcoin mining industry will need to remain knowledgeable and flexible. Even in tighter economic times, miners can prosper with the correct preparations, especially in ASIC management and firmware optimization.
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