Bitcoin miners are facing increasing competition and potential financial stress as the next block subsidy halving approaches, according to a report by analytics firm Glassnode. The report highlights that while the current high hash rate indicates strong miner competition, it also suggests challenging conditions for miners trying to make a profit at current Bitcoin price levels. The article mentions that ordinal inscriptions, which turn empty blockspace into a source of revenue for miners, are providing some help. However, the upcoming halving in April 2024, which will reduce miner rewards per block by 50%, could double the production cost per BTC and put the majority of the mining market under severe income stress.
The report by Glassnode presents two models to estimate the price at which miners would fall into the red. According to researchers, the most efficient miners on the network have an acquisition price of around $15.1k. However, the post-halving scenario would double this level to $30.2k, causing severe income stress for the majority of miners in the market. The article mentions another model that puts the average miner acquisition price at $24,300 per Bitcoin, about 8% below the current spot price. These factors indicate the potential challenges miners will face in maintaining profitability after the halving.
While the report warns of income stress and potential financial difficulties for miners, some analysts, such as Filbfilb, co-founder of trading suite DecenTrader, are more optimistic. Filbfilb suggests that miners are incentivized to ensure that Bitcoin prices are well above marginal cost before the halving, and they would likely increase their BTC accumulation in advance of the event. The article also mentions the possibility of smart money “buying the rumor” over the halving, further assisting the supply dynamics of BTC. However, it is important to note that this article does not provide investment advice and recommends conducting personal research before making any decisions.