Bitcoin Halving Event, A Crucial Event, is scheduled for April 19, 2024. This quadrennial event will reduce the block grant for Bitcoin miners from 6.25 BTC to 3.125 BTC, effectively cutting in half the reward miners receive for their efforts. Such events have historically led to profound changes in the mining landscape, potentially influencing various economic and operational facets of Bitcoin mining.
Economic outlook and market forecasts
After the halving, the immediate impact is a considerable decrease in miners' income due to the overall reduction in subsidies. This could cause the hashrate to drop as less efficient miners could become unprofitable and leave the network. Luxor Hash index The research team projects approximately 3 to 7% of The Bitcoin hashrate could go offline if the Bitcoin price maintains its current level. However, if prices decline, up to 16% of the hashrate could become economically unviable, depending on the trajectory of Bitcoin prices and transaction fees after the halving.
The hashrate, a key security measure for Bitcoin, could adjust based on difficulty levels to align with new economic realities. Luxor's analysis suggests different scenarios in which the network hashrate could end up being between 639 EH/s and 674 EH/s by the end of the year, reflecting adjustments to new revenue potential after the reduction A half.
ASIC Pricing and Breakeven
After the halving, the profitability of different ASIC models will become crucial as the mining reward decreases. Lower rewards mean that only the most efficient machines will be able to operate profitably if the price of Bitcoin does not see a significant increase. For example, according to Luxor's projections, next-generation ASICs like the S19 XP and M30S++ could have breakeven energy costs ranging from $0.07/kWh to $0.15/kWh, depending on halving after halving. hash price.
This change in profitability will likely result in a revision in the price of ASIC machines. Historical data suggests that ASIC prices are highly correlated with hash price; therefore, the planned reduction in hash price will result in a downward adjustment in ASIC values. This will particularly affect older, less efficient models, potentially accelerating their gradual withdrawal from the market.
The role of custom ASIC firmware halving
To combat declining profitability, miners are increasingly turning to custom ASIC firmware to improve the efficiency of their hardware. Firmware like LuxOS and BraiinsOS can improve machine performance by optimizing their power consumption and hashrate production, thereby lowering the break-even point for electricity costs. For example, underclocking an S19 with custom firmware could extend its operational viability by reducing its power consumption, thus maintaining profitability even at lower hash prices.
Public mining companies, in particular, are adopting custom firmware to improve the efficiency of their fleet. Companies like CleanSpark and Marathon have reported using custom solutions to improve operational efficiency. This trend is expected to increase as more miners seek to maximize production and minimize costs in the face of declining block rewards.
Bitcoin Halving in 2024 and Beyond
The 2024 Bitcoin halving is expected to significantly reshape the mining landscape, just like previous halvings. Although the exact outcomes are uncertain, the event will undoubtedly present both challenges and opportunities. Mining companies that plan strategically, taking into account both economic forecasts and operational efficiencies, will be better placed to navigate the post-halving environment. For those in the Bitcoin mining industry, staying informed and adapting will be key to leveraging the halving event as an opportunity rather than a setback. With the right preparations, including ASIC management and firmware optimization, miners can continue to thrive even in tight economic conditions.
This is a guest article from El Sultan Bitcoin. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.