Every four years, block rewards for Bitcoin miners are cut in half, reducing the supply of new coins. This event, historically linked directly to price, has many aspects. One aspect concerns whether miners will be able to survive. Especially since mining stocks have made significant gains, it may be beneficial to look into these details early.
Bitcoin Halving and Price
The estimated halving date with the current hash power is within April, and block rewards will be halved after the halving. Rewards will drop from 6.25 BTC to 3.125 BTC, naturally cutting miners’ income in half. If there is not a permanent massive increase in BTC price, we might even see companies going bankrupt due to the significantly increased cost of Bitcoin mining.
Ali Martinez stated that after the 2012, 2016, and 2020 halving events, the price of BTC increased by 11,000%, 2,850%, and 700%, respectively. Additionally, the last two bull seasons were of similar length, lasting 518 days and 549 days. Martinez predicts a similar scenario.
“If the upcoming bull market follows historical trends, we might witness the next BTC peak between April or October 2025.”
Miners May Face Bankruptcy
SeekingAlpha analyzed major Bitcoin mining companies and tried to measure the negative impact of block reward halving on these firms. Experts who examined the cost structures, operational efficiencies, and strategic positions of Bitcoin mining organizations determined that only MARA and IREN are prepared for the upcoming process. This is related to both operational efficiency and strategic foresight.
MARA and IREN are making serious efforts regarding competitive transaction costs per mined Bitcoin, which is a very important factor for their sustainability after the halving. Companies that do not prioritize operational efficiency are facing difficult times ahead.
Exceptional Bitcoin network activity, ordinals, and future similar fee income triggers could prove SeekingAlpha wrong, but the current outlook predicts a challenging future for all but two companies under normal conditions.
On the other hand, the scenario where a significant portion of miners disappear and are replaced by more institutional centralized structures poses another risk for Bitcoin’s future. Even if the shares of the two companies appreciate and the BTC price increases in the short term, everyone should be prepared for the potential negative consequences, including the risk of Bitcoin centralization, in the long term.