[ad_1]
The upcoming halving, which will take place on or around April 16, has expectedly sparked widespread discussion within the cryptocurrency community about where the Bitcoin price could go as a result.
As the event approaches, crypto investors and analysts are also assessing the potential impact on Bitcoin mining profitability.
Bitcoin mining profits after halving
Analysts at JPMorgan said in a note this week that the halving could have a “broad impact” on the Bitcoin mining industry.
“All else being equal, the halving will cut industry revenue in half, triggering a wave of consolidations and business closures while (hopefully) streamlining network hashrate and industry investment, ultimately good for the remaining operators,” explained JPMorgan.
The investment bank estimates that industry-wide gross profit, currently at about $2.5 billion per quarter, will decline by 30% to 40%, with network hashrate falling by as much as 80 EH/s (or 13.5%) at the bottom %) will decrease.
The block reward, which accounts for the vast majority of mining revenue, will be halved on or around April 16, according to Coinbase (NASDAQ:) estimates.
“After the halving, we expect an exahash of mining capacity to generate approximately $50,000 in daily block rewards (versus approximately $100,000 today), which would represent the lowest level since at least January 21st,” emphasized JPM analysts.
“However, some believe that transaction fees, which have historically accounted for a low single-digit percentage of mining revenues, could increase after the halving due to network upgrades that allow more data to be stored on the Bitcoin blockchain, which the could partially offset lower costs.” Block reward.”
Furthermore rated neutral CleanSpark (NASDAQ:) was called the “best positioned from a visual perspective” because it has the lowest total cost per coin in JPMorgan's reporting universe at $35,000 and is “on track to report record sales and gross profits.” -Halving due to favorable hashrate comparisons.”
On the other hand, despite having the lowest energy prices of any listed operator, the bank believes neutral-rated Cipher Mining (NASDAQ:) is “the worst positioned from a visual perspective” given tough computing power comparisons and relatively high overhead costs.
While JPMorgan notes that Bitcoin typically rebounds after the halving, they say the reaction is not instantaneous, explaining that over the three, six, nine, and nine years, Bitcoin rose on average by 11%, 59%, 262%. and 419% gained twelve months after the last two halvings due to perceived scarcity.
“Still, no two halvings are the same, and Bitcoin has gained more than 56% year-to-date and more than 150% over the past year,” JPMorgan warned.
Matthew Sigel, head of digital assets research at VanEck, told Investing.com that “a quadrennial Bitcoin halving can dramatically impact mining profitability, especially for those operating with less efficient rigs or higher electricity costs.”
“Historically, the hash rate (the total computing power used for mining and processing transactions) drops after a halving as unprofitable miners separate, but it tends to recover within weeks.”
“We expect that the halving will likely lead to consolidation within the mining industry, with smaller miners being squeezed out and larger players expanding their market share. However, this trend is already in place, with publicly traded miners now controlling a record percentage of the hash.” “Historically, Bitcoin mining stocks rebound strongly after the halving and outperform the spot price in the halving years,” Sigel added.
What is Bitcoin Halving?
Bitcoin halving is a process this takes place every four years, with the price and rewards for Bitcoin mining reduced by half. The purpose of this event, created by Bitcoin founder Satoshi Nakamoto, is to regulate the production of Bitcoin and keep the digital currency deflationary.
Bitcoin price prediction 2024
Mike Novogratz, the CEO of Galaxy Digital, spoke at the Bitcoin Investor Day in New York in March to share his insights on why he believes Bitcoin is likely to continue trending upwards.
Novogratz raised concerns about government spending and borrowing and said he sees Bitcoin as a beneficiary of US fiscal indiscipline.
“What is the macroeconomic story for Bitcoin?” said Novogratz. “It's relatively easy. Our government can’t shut up and stop spending money.”
“Until you see a government, both Democrats and Republicans, saying 'enough,' Bitcoin will continue to rise,” Novogratz added.
In early March, Alex Thorn, head of research at Galaxy, said that Bitcoin would “climb the wall of worry.” He believes Bitcoin’s rise is “still in its early stages.”
“Be confident, take your coins into self-custody if possible and enjoy the greatest game the markets have ever seen,” concluded Thorn.
Today's crypto market cap
The current market capitalization of cryptocurrencies is $2.57 trillion. Bitcoin is of course the frontrunner, with a market cap of $1.37 trillion at the time of writing. The trading price is currently above the $70,000 mark.
Meanwhile, the second largest cryptocurrency has a market capitalization of $407.76 billion, with the cryptocurrency currently trading at $3,515.
[ad_2]
Source link
