- Bitcoin halving in April may raise the mining cost to $37,856 per BTC.
- CoinShares report warns of profitability crisis for miners if BTC falls below $40,000.
- Riot Blockchain, TeraWulf, and Cleanspark were identified as best-positioned miners.
A new report warns that the upcoming Bitcoin halving, expected in April, could have the average cost of mining a single Bitcoin skyrocket to a staggering $37,856. This sharp increase could drive many miners out of business if Bitcoin fails to stay above $40,000.
The Bitcoin mining network, while experiencing explosive growth with a 104% hashrate surge in 2023, faces a looming profitability crisis. According to CoinShares, a digital asset investment company, the average cost of producing one Bitcoin will cost an average of $37,856 after the halving event.
“In this research article, we have estimated the weighted average for the cost of production and cash cost, which stood at approximately $16,800 and $25,000 per bitcoin, respectively, for Q3 2023. Following the halving event, expected to happen in April 2024, these costs are likely to rise to $27,900 and $37,800 respectively,” says James Butterfill, author of the CoinShares report. This rise threatens the profitability of many miners, especially those with high operating expenses.
The report identifies Riot Blockchain as the best-positioned miner to weather the storm, thanks to their efficient cost structure and long runway. Other miners like TeraWulf and Cleanspark are also expected to fare well due to their focus on operational efficiency and lower overhead.
However, many other miners would need to significantly cut their Selling, General, and Administrative Expenses (SG&A) to remain profitable post-halving. Failure to do so could lead to operating losses, forcing them to sell their Bitcoin holdings or even raise additional capital.
Without a sustained Bitcoin price above $40K, only a handful of the most efficient miners, including Bitfarms, Iris, CleanSpark, TeraWulf, and Cormint, will survive.
Despite the impending challenges, the report notes efficiency improvements within the mining network. The average efficiency of the network is currently at 34W/T, showing a promising trend of improvement, with analysts projecting a potential drop to 10W/T by mid-2026.
In light of historical trends, the Bitcoin halving is generally viewed as a bullish signal. Crypto analysts anticipate that Bitcoin could reach $55,000 and potentially achieve a new all-time high following the halving.
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