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2024's halving event will bury many miners

29 Sep, 2023
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Some public miners already fell during the 2021-2022 race. That includes, for example, a major one, Core Scientific, which is undergoing bankruptcy proceedings. However, the rising mining difficulty and declining Bitcoin price didn't stand in crypto miners' way. Total computing capacity grew by 54% this year to 417 EH/s.

Image source: hashrateindex.com

The yield from one terahash of capacity has reached a new all-time low, now sitting at 2.26 BTC or $60,000 per day.

Image source: glassnode.com

We've already featured stories on forward-thinking companies that connect farms directly to power plants (by bypassing distribution networks) or rely on renewable energy sources. The industry's best energy prices are $0.02-0.03 per 1 kWh of electricity.

These low expenses lead to Bitcoin mining costing around $15,000, while the industry's average cost, according to Glassnode, is $24,000.

Image source: glassnode.com

Miners are teetering on the edge and counting on the imminent rise of Bitcoin's price. Most forecasts from the public crypto miners cite prices from $35,000 to $75,000 for the next six months.

Image source: StormGain cryptocurrency exchange

However, the reality may hurt way worse. The chairman of the US Federal Reserve has already stated that the regulator will keep high rates for a longer period, and JPMorgan's CEO, Jamie Dimon, warned investors of a possible increase to 7%. In such a scenario, risky assets are weak against US Treasury bonds, whose yields are growing amid the Fed's monetary policy tightening.

At the same time, Bitcoin is expected to have a halving event, which would cut the income from mining blocks by two, in mid-April. The reward for block currently accounts for 96% of miners' income. Only 4% comes from commission received by network users. 

Image source: glassnode.com

In other words, the cost of mining, even for top farms with the best electricity rates, will skyrocket to $30,000 a coin. If Bitcoin's price or network fees don't rise prior to the halving event, miners will face a critical drop in their financial performance.


StormGain Analytical Group 
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