A new report from analytics firm Glassnode warns that Bitcoin miners may face significant challenges as the block subsidy halving approaches. The competition among miners has surged, with record-high hash rate indicating intense mining activity. While miners currently benefit from ordinal inscriptions, which turn empty blockspace into a source of revenue, the increase in blockspace demand will positively affect their revenues. However, with the upcoming halving in April 2024, miner rewards per block will drop 50%, resulting in a doubling of the “production cost” per BTC. This is expected to put the majority of the mining market under severe income stress.
Glassnode presents two models for estimating the price at which miners may face difficulties, with one model showing an acquisition price of $15.1k and the other model indicating a doubling of this level to $30.2k after the halving. The average miner acquisition price is currently estimated to be $24,300 per Bitcoin. Some analysts, however, are more optimistic and believe that miners will increase their BTC accumulation ahead of the halving. They argue that miners have an incentive to drive up prices before their revenue is halved, whether through conscious collusion or collective motivation. This anticipation of the halving and its impact on Bitcoin supply dynamics may attract smart money investors.
Please note that this summary is provided as is and does not contain any investment advice or recommendations. Readers are advised to conduct their own research before making any financial decisions.