Only a few Bitcoin miners will be able to make a profit after the halving: report

Analysts believe that Riot, TerraWulf, and Cleanspark will be the best-placed Bitcoin miners for the upcoming halving event, which will likely make hacking a more difficult task.

The Bitcoin halving, an event that takes place once every four years, halves the block reward paid to miners on the network. While the reduced amount of coins entering circulation is a welcome development for Bitcoin holders in relation to the price, the same cannot be said for miners who will bear the brunt of the smaller reward in a capital-intensive operation.

a a report CoinShares’ study of the impact of the halving on miners suggests that only a small number of miners will remain profitable, depending on the price of Bitcoin remaining above the $40,000 mark.

In the past year alone, the Bitcoin network recorded a 104% increase in hash rate, which represents the amount of new computing power devoted to mining the cryptocurrency. The CoinShares report found that the average production cost per Bitcoin per miner after the halving will reach $37,856.

Based on historical data on hash rate, it appears that miners are increasing their capital spending in order to remain competitive in anticipation of the halving, after which they receive less immediate income.

This so-called “Bitcoin rush” increases the difficulty of mining in the months leading up to the event, pushing out miners unable to keep up with the high cost of production. Analysts estimate that the post-halving hash rate could reach up to 550 exahashes per second (EH/s) by the end of 2024.

“This halving is likely to drive out those on the higher end of the cost curve, leaving those with sufficient liquidity a great opportunity to obtain devices at a discounted price,” he noted.

When calculating the cost of electricity to miners, the number of bitcoins produced, computing power, and operational expenses using their funds and reserves, CoinShares analysts believe Riot, TeraWulf, and Cleanspark are in a better position ahead of the halving.

“Most of the pain miners are experiencing is likely stemming from large SG&A expenses that will likely need to be reduced to remain profitable,” they said.