At the end of last week, Bitcoin's seven-day average computing power hit a record high over the weekend, and the mining difficulty is expected to increase by 4.93% to 53.14T. Miners are facing an increasingly difficult survival test.
The halving of Bitcoin block rewards every four years is a bull market catalyst that the market is eagerly anticipating. The fourth halving is currently predicted to arrive in April 2024, and the block reward will be reduced from 6.25 BTC (approximately US$187,500) to 3.125 Bitcoin (approximately $94,000), however this may be a death knell for some Bitcoin miners, weighing the balance between block rewards tied to the price of the currency and capital costs such as mining power and equipment. become more complex.
"Bloomberg" reported on the 8th that Hashrate Index cryptocurrency mining analyst Jaran Mellerud predicted that "nearly half of the miners will suffer losses during the next halving because their mining operations are less efficient and more costly."
The break-even electricity price for the most common mining rigs is expected to drop from 12 cents/kWh to 6 cents after the halving. Currently about 40% of miners still have operating costs per kilowatt hour higher than this.
Miners with operating costs above 8 cents/kWh will struggle to stay afloat, as will smaller miners who do not operate their own mining rigs but outsource them.
The current reward for each block is 6.25 BTC (worth about $170,000), and by April 2024, this reward will be reduced to 3.125 BTC (worth about $85,000).
Some mining analysts said that the current cost of mining one Bitcoin for listed mining companies is US$10,000-15,000. Once the halving occurs, these costs will double, bringing the break-even point for miners to $20,000 to $30,000. The next halving is expected to see “nearly half of miners suffer losses because their mining operations are less efficient and more costly.”
In this regard, some mining company executives have made it clear that in order for miners to maintain the same profit margin after the halving, the price of Bitcoin must rise to US$50,000 to US$60,000 next year.
In terms of mining difficulty, data shows that the next difficulty will increase by 4.93% to 53.14T, breaking the all-time high of 52.35T set on June 14.
The increase in Bitcoin mining difficulty and the subsequent halving of block rewards are expected to have a serious impact on all Bitcoin miners. The head of Bitcoin miner Lotta Yotta predicts that many miners will be driven out of the market during next April’s halving event.
According to a report by K33 Research, 100% of May production from listed miners has been sold.
Also in June and July, cumulative 30-day transfers of BTC from miner wallets to exchanges surged to a six-year peak, suggesting miners may continue to sell off Bitcoin at an alarming rate.
Coin Metrics’ miner one-stop supply, which represents the total amount held in wallets that receive coins from mining pools, also fell to its lowest point in a year. It shows that miners are uploading more coins than they can produce.
The current cost for listed miners to mine one Bitcoin is US$10,000-15,000. Once the halving occurs, these costs will double and the break-even point will be $20,000-30,000.
Kevin Zhang, senior vice president of mining strategy at Foundry, a cryptocurrency mining company owned by DCG, said that in order for miners to maintain the same profit margin after the halving, the price of Bitcoin must rise to $50,000 to $60,000 next year. Standard Chartered Bank pointed out in a weekend research report that according to the preset "halving" procedure, the supply of Bitcoin rewards to miners will drop from about 900 to about 450 per day. This "halving" occurs every four years, keeping the number of Bitcoins below 21 million.
Analysts at Standard Chartered said miners have traditionally sold their Bitcoin rewards to the market to make a profit. If the price of Bitcoin rises, miners can cover their costs by selling fewer Bitcoins and retain more for future price increases. "At recent prices, they (miners) have been selling 100% of new Bitcoin; at $50,000, we think they will sell 20%-30%."
Standard Chartered believes that it has previously underestimated the impact of increased miner profitability on the reduction of new Bitcoin supply. Now they expect the price of the currency to reach US$50,000 by the end of this year and as high as US$120,000 in 2024.
At present, it is increasingly difficult for Bitcoin mining to survive. In addition to significantly rising electricity costs and increasingly heavy debt financing burdens, the increasingly fierce competition among Bitcoin miners has also compressed profit margins.
The mining report released by Hashrate Index over the weekend (9th) showed that Bitcoin’s 7-day average computing power hit a record high of 401 EH/s over the weekend, and the 7-day average rose 8.5% weekly to 398 EH/s, while the 3-day The average rose by 18% to 444 EH/s. Since mid-June, in response to the soaring electricity prices caused by the heat wave, Bitcoin miners in Texas, the second largest state in the United States, have restricted operations. At that time, Bitcoin's computing power dropped. However, after entering July, the computing power has exploded. return.
The report predicts that the growth in computing power during the next difficulty adjustment (approximately once every two weeks) will be very huge, and is likely to soar again by more than 7.5%. Hashprice, which is commonly used to measure miner income (factors that affect it include Bitcoin price, Bitcoin block rewards, mining pool fees, etc.) may fall below $70/PH/day when the next difficulty adjustment comes.
In terms of mining difficulty, BTC.com data shows that the next difficulty will increase by 4.93% to 53.14 T, exceeding the all-time high of 52.35 T set on June 14.
According to f2pool data, based on Taiwan’s indicator of US$0.1 per kilowatt-hour of electricity, there are currently only 13 mining machines that have not reached the shutdown currency price. The current daily net profit of the Antminer S19 XP model is approximately US$3.1. Based on the S19 XP The market price is estimated at US$4,653, and it will take more than 4 years to recover the investment now.
