Every four years, an event happens that conditions the entire Bitcoin ecosystem. It is a crucial moment for miners as the amount of bitcoin mined is halved. It’s known as the “Bitcoin halving” and is a cryptocurrency-specific event that has already happened in 2012, 2016, and 2020. The next will be in 2024. There is a lot of uncertainty about what will happen next. the moment is open.

Divide the benefits of mining into two. The ‘halving’, as the name suggests, splits the amount of bitcoin mined in half to verify transactions. The next event is scheduled for April 2024, and as announced by Fortune, miners will see their benefits drastically reduced.

If approximately 6.25 BTC is currently obtained, equivalent to approximately 172,600 euros per block, then 3,125 BTC per block will continue to receive approximately 86,300 euros. This is with the current change. It’s true that “halving” has traditionally meant significant increases in Bitcoin’s own value, but it still means a drastic drop in profits for miners.

The last few times, Bitcoin has skyrocketed. This is pure speculation, but the confidence is that the ‘halving’ will help trigger the price of the cryptocurrency. Before the 2012 halving, the all-time high was $30. Four months later, it was already over $270.

Something similar happened in 2016, when it grew 290%. And even in 2020, when Bitcoin increases by 560%. This increase, which has been repeated to date, is the hope that miners’ activities will continue to make up for it.

These are needed in the long run. One of Bitcoin’s greatest strengths is that it retraces the project set. There will be another “halving” in 2028, where miners will receive 1.56 BTC per block. And so gradually. The ultimate goal is to reach a total of 21 million Bitcoins by 2140. Once this point is reached, mining can no longer be done.

The mining economy is heavily dependent on energy. GPUs evolve and Bitcoin’s price changes, but the most decisive factor for miners to see if their numbers come up is the energy consumed.

Hashrate Index crypto mining analyst Jaran Mellerud explains that after the halving, mining is expected to drop to “six cents per kilowatt hour”. But he also points out that the average mining cost is about eight cents per kilowatt hour.

40% of miners will no longer get numbers. This means that 40% of miners will have operating costs that outweigh the benefits they will get from mining bitcoin after the ‘halving’. This would result in many miners having to quit their operations as it was not profitable.

And you have to add the outstanding debts. It’s true that in 2023 Bitcoin has recovered, but it’s still a long way from its all-time high of around $69,000 at the end of 2021. has led the energy industry into a huge debt to cryptocurrency mining.

According to Luxor Technologies estimates, miners owe between $4.5 and $6 billion worldwide. It’s still a very high level, despite being below the $8,000 million in debt they had in 2022.

The cost of producing one Bitcoin will exceed $40,000. Estimates by JPMorgan analysts. If it were possible to drop to around $13,000 in 2022, the cost of producing a bitcoin after the ‘halving’ would easily double and is estimated to be around $40,000. This is the psychological figure that can determine the future price of Bitcoin itself.

This scale does not include the cost of debt, management of equipment, rent of the ground, or other data beyond just those related to the purchase of equipment and energy requirements. A cost increase that will outlast many miners.

Who will survive? First of all, it will depend on the price of Bitcoin itself. If it increases according to the needs of the miners, there will be more possibilities for those with large mining farms. Only miners with very low operating expenses (less than six cents per kilowatt hour) will be able to continue unless the Bitcoin price rises as quickly as expected.

To achieve this, many are betting on energy efficient farms, often based on renewable energy. Bitcoin mining is getting professional, but many will be interrupted.

Image | Axel Castillo

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