February 20, 2020 – Research firm Tradeblock said the upcoming Bitcoin halving will trigger a doubling of costs for crypto miners.
The Bitcoin halving, which occurs every 4 years is set to happen around May 2020. The issuance of new bitcoin will decline by 50%.
According to TradeBlock, currently, mining operators are operating on profit as bitcoin price increased in 2019 and especially these last 2 months. The other side of this is that the Hash Rate, the general measure of the Bitcoin network’s processing power, is also increasing – almost making new highs each week. If the hash rate increases, the resources needed to secure the network through mining activities also rise. For miners to maintain profit margins, if the hash rate rises, the bitcoin price must also rise.
Of course, miners will also be looking to reduce mining costs. This is normally done through using newer and more efficient mining devices. And in line with that, the cost to acquire these newer rigs must be taken into account.
TradeBlock said that based on their research, the current gross cost to mine one bitcoin is $6,851. However, assuming that hash rate will increase over the next three months and assuming that many commercial mining operators will transition to newer mining rigs, the gross cost to mine 1 bitcoin will be $15,062. TradeBlock also said that if the hash rate stays at current levels, the the cost will be $12,525.
In summary, TradeBlock assumes that miners are expecting that bitcoin’s price will (must?) likely reach around $12,000 – $15,000 in order for them to continue generating profit. Or else, they will reduce their resources, which will result in a hash rate decline as profitability falls.
This article is published on BitPinas: [One Effect of Bitcoin Halving] Cost for Miners Will Double
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