Miners are approaching the fourth Bitcoin halving last month

With 34 days to go until the next halving of the Bitcoin network, expected around April 20, 2024, rewards for miners will be halved. This event is known as one of the most influential moments in the life cycle of Bitcoin (BTC), as it directly affects the currency’s inflation and the miners’ income.

Throughout March, Bitcoin’s price crossed the $60,000 mark, peaking near $74,000 on March 14. While the increase in on-chain fees and price increase may offset revenue losses for miners, the halving will make mining significantly less profitable, especially for those with high operating costs. This may result in some mining operations being halted.

Miners are bracing for upcoming reward cuts

Bitcoin’s inflation rate is expected to slow significantly around April 20, 2024, when the fourth halving reduces the number of Bitcoins per block from 6.25 to just 3,125. By comparison, if the halving had occurred last year on April 20, 2023, with Bitcoin priced at $28,245 each, the scenario would have been drastically different. At the time, miners generated approximately $25.42 million daily by mining approximately 900 BTC. However, after the halving, with only 450 BTC mined, revenues would have dropped to approximately $12.71 million.

Currently, Bitcoin’s price is hovering just above $67,000, which equates to daily revenue of $60.3 million from block rewards alone, excluding transaction fees. If the price remains at this level, the halved daily output of 450 BTC miners could still earn $30.15 million, more than the $25.42 million earned from 900 Bitcoins in April last year. Additionally, miners are now earning more per transaction, with the average fee increasing to $8.28 or 37.7 satoshi per virtual byte, compared to $2.05 per transfer in April 2023.

Considering the current price has doubled from April 2023 and fees have quadrupled, well-established mining operations such as those reported in this article will remain profitable if these trends continue or greatly improve. However, a drop in the price of Bitcoin to $50,000, $40,000 or below $30,000 could significantly impact miners’ profitability. Traditionally, halving events have been followed by BTC price increases over the medium to long term, which have always compensated for the reduced block rewards.

Although every halving has historically been followed by a price increase, it is essential to recognize that market cycles may not always repeat previous patterns. As the ecosystem prepares for the next halving, the current backdrop of fluctuating prices and fees paints a complex picture for miners. The interplay between potential revenue streams and the current uncertainty of crypto market values ​​underlines a pivotal moment. The fourth halving will not only test the resilience and adaptability of miners, but could also set a precedent for the future direction of the digital currency.