Bitcoin halving to raise ‘efficient’ BTC mining costs to $30K

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<p>Bitcoin (BTC) Ordinals are boosting miner profits, but “income stress” is looming, new research warns.</p>
<p>In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode predicted fresh problems for miners after Bitcoin’s next block subsidy halving.</p>
<h2>Bitcoin halving impact on miners could be “severe”</h2>
<p>Bitcoin miner competition is exploding, with hash rate — the estimated combined processing power deployed to the blockchain — at record highs.</p>
<p>For Glassnode, this indicates unprecedented conditions for miners trying to eke out a living at current BTC price levels.</p>
<p>Ordinal inscriptions are helping, with these acting as “packing-filler” which turns empty blockspace into a source of revenue for miners.</p>
<p>“Naturally, as blockspace demand increases, miner revenues will be positively affected,” it wrote.</p>
<figure><img decoding="async" src="https://s3.cointelegraph.com/uploads/2023-09/b374bc8d-9fd0-406e-89ca-b21c2e52f1b0.png" /><figcaption><em>Bitcoin Mean Hash Rate (7-day moving average) chart (screenshot). Source: Glassnode</em></figcaption></figure>
<p>The proportion of income received from fees has increased between 1% and 4% compared to lows seen during Bitcoin bear markets, but by historical standards remains modest.</p>
<p>“Meanwhile, the amount of hashrate competing for these rewards has increased by 50% since February, as more miners, and newer ASIC rigs are established and come online,” “The Week On-Chain” notes.</p>
<p>This hash rate spike is laying the foundation for an upcoming showdown. In April 2024, miner rewards per block will drop 50%, doubling the so-called “production cost” per BTC. Currently around $15,000, this will pass $30,000 — above the current spot price.</p>
<p>Glassnode presented two models for estimating the price at which miners, on aggregate, fall into the red, with the above comparing issuance to mining difficulty.</p>
<p>“By this model, we estimate that the most efficient miners on the network have an acquisition price of around $15.1k,” researchers explained. </p>
<blockquote><p>“However, the purple curve shows the post-halving ‘doubling’ of this level to $30.2k, which would likely put the majority of the mining market into severe income stress.”</p></blockquote>
<figure><img decoding="async" src="https://s3.cointelegraph.com/uploads/2023-09/cd30f815-8399-4357-bea0-bd482d80d16a.png" /><figcaption><em>Bitcoin Difficulty per Issuance Pricing Model (screenshot). Source: Glassnode</em></figcaption></figure>
<p>A previous model put the average miner acquisition price at $24,300 per Bitcoin — around 8% below spot as of Sept. 28.</p>
<figure><img decoding="async" src="https://s3.cointelegraph.com/uploads/2023-09/2791433e-f62e-40b3-b689-ab810f243bb6.png" /><figcaption><em>Bitcoin Difficulty Regression model (screenshot). Source: Glassnode</em></figcaption></figure>
<h2>BTC price incentives</h2>
<p>Others are more optimistic about how miners will handle the build-up to the halving.</p>
<p><strong><em>Related: Bitcoin exchange volume tracks 5-year lows as Fed inspires BTC hodling</em></strong></p>
<p>In an interview with Cointelegraph this month, analyst Filbfilb, co-founder of trading suite DecenTrader, reiterated that miners would up BTC accumulation in advance of the event.</p>
<p>“Miners are incentivized to ensure that prices are well above marginal cost prior to the halving,” he wrote in an X (formerly Twitter) thread in August. </p>
<blockquote><p>“Whether they collude consciously, or not they are collectively incentivized to send prices higher before their marginal revenue is effectively halved.”</p></blockquote>
<figure><img decoding="async" src="https://s3.cointelegraph.com/uploads/2023-09/4a4a3013-a102-4248-a60c-0b443e3cd1c9.png" /><figcaption><em>BTC/USD chart with miner accumulation data. Source: Filbfilb/X</em></figcaption></figure>
<p>Assisting BTC supply dynamics will be what Filbfilb calls smart money “buying the rumor” over the halving and its own impact on the amount of BTC being minted.</p>
<p>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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