Significant developments continue in the cryptocurrency market. Bitcoin mining profits significantly dropped with the onset of the effects of the fourth Bitcoin halving event in May. The Bitcoin halving mechanism is designed to gradually limit the supply of 21 million Bitcoins over decades. The halving event that occurred on April 20 reduced mining rewards from 6.25 Bitcoins to 3.125 Bitcoins.
Halving Process and Bitcoin
The initial excitement related to the halving event and the launch of Bitcoin Runes temporarily supported miners’ daily earnings, but a strong revenue decline was recorded in May. On May 1, total revenue from block rewards and transaction fees fell to $26.3 million. In contrast, before the halving event, Bitcoin miners were earning an average of $6 million per day according to data from Blockchain com.
The rest of May also recorded similar revenue models, signaling a new normal in Bitcoin mining income. During this period, mining income peaked on April 20, reaching an all-time high daily gain of over $107 million for the first time in Bitcoin history.
Anticipating this significant drop, miners worldwide re-strategized their operations to remain profitable in the next phase of the Bitcoin economy. Otherwise, miners would have to rely solely on Bitcoin’s high market value to support their operations.
Prominent Figures Respond Promptly
CryptoQuant CEO Ki Young Ju calculated that for mining to remain profitable post-halving under current conditions, Bitcoin needs to stay above $80,000. However, most miners took proactive measures to upgrade their mining equipment to maintain competitiveness while reducing long-term operational costs.
For example, the Bitcoin mining company Bitfarms allocated $240 million to triple its hash rate. Previously commenting on this, Bitfarms’ CFO Jeffrey Lucas explained the company’s goal of procuring 88,000 high-efficiency Bitcoin miners:
“The transformational fleet upgrade increases Bitfarms’ scale and profitability amid the Bitcoin halving event. This triples our hash rate to 21 EH/s, increases our targeted operating capacity by 83% to 440 megawatts (MW), and enhances our fleet efficiency by 40% to 21 megawatts with TH.”
Despite efforts, Bitfarms recorded its lowest monthly gain in over two years in April, with 269 Bitcoins.
