According to CryptoPotato, Bitcoin miners are gearing up for the fourth Bitcoin halving, expected in about 15 days. This event will significantly reduce their block rewards, posing challenges to their profitability. Despite an increase in selling activity by some Bitcoin mining companies, they continue to grapple with issues such as lower transaction fees, heightened mining competition, and the requirement for more computing power to generate the same amount of Bitcoin (BTC).
The halving will cut Bitcoin block rewards from 6.25 BTC to 3.125 BTC, slashing miners' revenues by 50%. To maintain profitability, miners will need higher BTC prices. CryptoQuant's recent weekly crypto report showed that the mining industry's daily revenue hit record levels in 2024 due to rising BTC prices. While the current daily revenue is around $67 million, it peaked at $79 million in early March, a 3.5x increase from figures recorded in May 2020, just before the previous halving event.
However, the increase in daily revenue did not reflect in the hashprice, which is 30% lower than before the last halving. The hashprice, or the average revenue a miner earns each time it attempts to find a valid block, is currently $0.11 and is expected to drop to $0.055 after the halving. In May 2020, the hashprice was around $0.16 TH/s. Additionally, the Bitcoin hashrate has increased more than five times since the previous halving, from 116 EH/s to 600 EH/s, indicating that miners need more computing power to produce the same amount of BTC per day.
Bitcoin transaction fees have also dropped 90% from a daily total of 412 BTC in mid-December 2023 to 29 BTC currently. Transaction fees now account for about 3% of the total block reward, down from 37% in mid-December 2023. To compensate for the loss of block reward, higher fees or Bitcoin prices are necessary, according to CryptoQuant analysts.
These challenges have already impacted the daily BTC production of major Bitcoin mining companies like Riot Platforms, Core Scientific, Bitfarms, and Marathon Digital. The effects of the upcoming months on these firms remain to be seen.