Upcoming Bitcoin Halving: Are Mining Companies in Danger?

Halving Bitcoin: Opportunity or Threat for Mining Companies

The annual Bitcoin halving event evokes a lot of emotions and controversies in the world of cryptocurrencies. Each halving, which halves the block rewards, always raises questions about the profitability of mining the cryptocurrency. What challenges are awaiting mining companies after the upcoming halving?

Profitability Post-Halving

According to Laurent Benayoun, CEO of Acheron Trading, the expected decrease in block rewards will be offset by the increasing network fees. After previous halvings, smaller mining companies were forced to cease operations due to the reduction in block rewards. However, after the 2024 halving, the rise in network fees, supported by Ordinals inscriptions and Bitcoin-based decentralized finance (BTCFi), is expected to prevent mining companies from going bankrupt.

Rise in Network Fees

Currently, the average Bitcoin transaction fee is $4.88, marking an 86% increase over the past year. Mining companies usually become profitable when the price of Bitcoin is above $70,000. Despite Bitcoin’s price dropping by 4.3% last week to $66,851, the prospects for an increase in network fees remain promising.

Energy Efficiency

A crucial factor affecting a mining company’s profitability will be the quality and energy efficiency of its mining equipment. On March 6, when the price of Bitcoin surpassed $69,200, it resulted in the second-best revenue from Bitcoin mining in history.

Perspectives for Change

With the increase in Bitcoin price and rising network fees, fewer mining companies will be forced to cease operations compared to previous cycles. This change gives hope for stabilizing the mining market and increasing interest in cryptocurrency mining.