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Bitcoin (BTC) Ordinals are boosting miner earnings, however “earnings stress” is looming, new analysis warns.
Within the newest version of its weekly e-newsletter, “The Week On-Chain,” analytics agency Glassnode predicted contemporary issues for miners after Bitcoin’s subsequent block subsidy halving.
Bitcoin halving influence on miners may very well be “extreme”
Bitcoin miner competitors is exploding, with hash price — the estimated mixed processing energy deployed to the blockchain — at report highs.
For Glassnode, this means unprecedented situations for miners making an attempt to eke out a dwelling at present BTC value ranges.
“Naturally, as blockspace demand increases, miner revenues will be positively affected,” it wrote.
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.
“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.
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.
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.
“By this model, we estimate that the most efficient miners on the network have an acquisition price of around $15.1k,” researchers explained.
“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.”
A previous model put the average miner acquisition price at $24,300 per Bitcoin — around 8% below spot as of Sept. 28.
BTC price incentives
Others are more optimistic about how miners will handle the build-up to the halving.
Related: Bitcoin exchange volume tracks 5-year lows as Fed inspires BTC hodling
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.
“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.
“Whether they collude consciously, or not they are collectively incentivized to send prices higher before their marginal revenue is effectively halved.”
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.
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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