Approaching the Fourth Bitcoin Halving Event
As of Jan. 9, 2024, fewer than 15,000 blocks remain before the fourth Bitcoin halving event. This milestone will halve the block reward from 6.25 to 3.125 bitcoins per block. Expected to occur in April 2024, this event will render bitcoin increasingly scarce. However, it may exert considerable pressure on miners, seeing their earnings cut by 50% following the halving.
The Past Concerns About a Mining Death Spiral
Before the previous halving events in 2012, 2016, and 2020, skeptics of bitcoin predicted a ‘mining death spiral’ that could lead to miner capitulation. They argued that the reduced block rewards would decrease profitability, resulting in miners leaving the network, slower transaction times, and potential security vulnerabilities. However, a 2020 study dismissed these concerns as hypothetical without any real-world precedent.
Boosted Earnings for Miners
Two key developments have boosted the earnings of bitcoin miners: the anticipation of a U.S. spot bitcoin ETF approval and the growing popularity of Ordinal inscription minting. This has led to a rise in mining revenue throughout 2023 and continued into the new year. The potential approval of an ETF has raised BTC’s value and increased transaction fees.
Earnings Outlook for Miners
Despite lower fees compared to last month, they are still higher than the same period last year. The potential demand for bitcoin from publicly traded funds, if an ETF is approved, could maintain a high price. Additionally, major mining operations are scaling up their hashrate with advanced mining rigs, which, along with higher fees and potential price support, suggests that miners will remain resilient during the fourth halving event.
Hot Take: Miners Prepare for Halving with Optimism
The upcoming fourth Bitcoin halving event, set to occur in April 2024, presents some uncertainty for miners. However, with the boost in earnings from the anticipation of a spot bitcoin ETF approval and the popularity of Ordinal inscription minting, miners are optimistic. Major mining operations are investing in advanced mining rigs, increasing their hashrate outputs. With these factors and the potential price support from an ETF, miners may weather the halving event and continue their resilient performance seen in previous halvings.
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