In previous “halvings,” many small mining companies filed for bankruptcy because they couldn’t afford to pay. For example, while it cost companies $35,000 to mine 1 Bitcoin, after the halving, the cost will skyrocket to $70,000.
The average cost of mining Bitcoin as of April 6 was $49,902, when Bitcoin was around $70,000. Therefore, Bitcoin's price must surpass $80,000 after the halving for miners to continue making a profit.
Bitcoin price after halving events in 2012, 2016 and 2020
CoinTelegraph screenshot
Kristian Csepcsar, communications director at Bitcoin mining company Brains, stressed that miners are the real Bitcoin players. Although the halving puts a lot of pressure on the entire mining industry, everyone understands why the event is an integral part of Bitcoin, he added.
To cope with the negative impact of the halving, many mining companies are increasing their cash reserves, operating their mining machines at maximum capacity and taking advantage of selling more Bitcoin while the price is high.
Joe Downie, marketing director of cryptocurrency mining service NiceHash, said that the profitability of mining companies depends on the quality and performance of the Bitcoin mining machines, not the size of the farm. Ethan Vera, CEO of cryptocurrency mining service Luxor Technology, estimated that about 600,000 S19 Bitcoin miners in the US have been sold to other places such as Africa and South America. While these devices can still be profitable, they are not suitable for the high cost in the US.
According to Bloomberg, S19s, which cost $7,030 in March 2022, will fall to $356 after the halving. Instead of selling their mining rigs at a discount, some U.S. miners are choosing to move their equipment to regions with lower electricity costs and third-party data centers.
Meanwhile, Laurent Benayoun, CEO of hedge fund Acheron Trading, said that Bitcoin mining profitability will not necessarily decrease after the halving. The reduction in mining rewards will be offset by an increase in transaction fees (Bitcoin network fees). He also predicted that this time around, fewer mining companies will shut down compared to previous cycles.
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