Our analysts claim a new rate of return is forming in cryptocurrency mining after Bitcoin's fourth halving of Bitcoin
Bitcoin miners have started to feel the effects of halving - their income has fallen to a new low. After April 20, their main source of income was halved and they are forced to adapt to the new market conditions.
Halving is a planned and programmed event in the bitcoin code. New bitcoins are created by miners whose computers perform complex calculations. And who validate transactions in a public registry - the blockchain. These transactions are packaged into blocks, and the miners compete with each other to see exactly who finalizes a new block of transactions.
When a block of transactions is finalized by a miner, that miner receives the newly issued bitcoins in the form of what is known as a block reward. The size of this reward was halved once again on April 20 - from 6.25 to 3.125 BTC.
Bitcoin miner profits are made up of two factors
The first is this a fixed fee for adding new transaction blocks to the blockchain. And from commissions for processing user transactions. The first source was scheduled to halve after the April 20 halving. And the second one kept at an atypically high level until the beginning of May. But also decreased already in the first days of May.
The size of commissions depends not on the amount, but on the size of the transaction data in bytes. Space in one transaction block is limited, and the higher the demand for it, the higher the commissions increase. With the advent of the Ordinals and Runes protocols (analogs of NFT for bitcoin), it became possible to add media files to transactions. This had a big impact on the total size of transactions. And, as a consequence, on the commissions received by miners for their processing.
The Runes protocol was launched at the same time as bitcoin halving; it can be used to issue collections of tokens, around which a speculative frenzy immediately arose. In an attempt to promote the transaction to the "anniversary" block numbered 840 thousand. And on which the halving took place, users paid inflated fees - more than $100 for transferring bitcoins and thousands of dollars for issuing ("mint") tokens of BRC-20 and Runes format. It is believed that tokens from the first blocks after halving may hold more value for speculators and collectors in the future.
Such an effect did not last long. By early May, total revenue from block rewards and commissions had already fallen to a new low of $26.3 million, according to Blockchain.com. Before the halving, miners were earning an average of about $60 million per day.
The wallet data of the largest mining pools is public. And that's why analytics services can track miners' income in real time. Public mining companies also send monthly financial reports to regulators, which are publicly available.
Halving logically reduced the number of bitcoins mined as well
Canadian mining company Hut 8 has reported. The company reported that in April it mined 36% fewer coins than the month before - 148 BTC compared to 234 BTC in March. According to The Miner Mag, Hut 8 dismantled more than 25,000 mining devices in April to minimize the downtime of unprofitable equipment.
The record bitcoin appreciation in March gave miners a significant income. And which they used to buy equipment or new capacities. For example, the American Bitfarms announced that it will spend $240 million to buy more efficient equipment. In order to adapt to the effects of halving. Marathon Digital, the largest U.S. mining company, spent more than $200 million to purchase data centers to house its equipment.
Our experts note that after halving, the average cost of mining one bitcoin will rise to $53 thousand. The founder of the analytical platform CryptoQuant, Ki Yong Ju, wrote that bitcoin needs to stay above $80 thousand. In order for mining on the most popular devices to remain profitable in the current environment. $BTC
