With the upcoming bitcoin halving, miners' expenses are about to change. Here we show, in numbers, what the minimum prices for popular platforms would be like.
bitcoin Halving and Its Influence on Mining Machine Price Floors
Halving is a periodic event on the bitcoin network where the block rewards received by miners for successfully solving a block are permanently reduced by half. This event happens automatically every 210,000 blocks, or approximately every four years.
The reason halving exists is that block rewards serve as the only way to introduce new btc tokens into circulation, so by periodically halving them, the production rate of the cryptocurrency can be decreased. and, therefore, its inflation can be controlled.
Supply and demand dynamics dictate that the rarer an asset is, the higher its value should be. The halving ensures that bitcoin becomes scarcer with each event as only half the amount enters the subsequent supply.
The next halving will take effect in about 11 days, meaning supply is about to shrink even further. The current block reward for the cryptocurrency is 6.25 btc, so it will go to 3.125 btc after the halving.
While the halving is positive for the asset in economic terms (at least on paper), its existence is problematic for the miners' finances. This is due to the fact that block rewards usually account for the majority of miners' income.
in a new twitter.com/ki_young_ju/status/1777242916098101587″ target=”_blank” rel=”noopener nofollow”>mail On x, CryptoQuant Founder and CEO Ki Young Ju talked about how the btc halving is about to change mining floors.
The following graph shows the trend of the minimum prices of some of the most popular mining platforms on the market:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/How-will-the-Bitcoin-halving-change-the-cost-of-mining.jpeg" alt="bitcoin mining cost” width=”1628″ height=”1146″/>
The data for the floor price of S19, S19 XP, and S21 over the last few years | Source: twitter.com/ki_young_ju/status/1777242916098101587/photo/1" target="_blank" rel="noopener nofollow">@ki_young_ju on x
As shown in the chart above, the Antminer S19 currently has a floor price of $54,900, meaning that miners who have these rigs installed on their farms would only break even when the btc price is $54,900.
The S19 XP, which is common among US-based miners, has a minimum price of $40,000 right now. The efficient S21 is currently the most cost-effective with a price of $27,900. However, as mentioned above, these are about to change with the halving.
Costs would double for all these miners, and users of the popular S19 XP would go under, with its production cost jumping to $80,000. It would also be even worse for S19 owners, who will only break even at the $109,800 price tag.
However, those who invested in the latest Antminer S21 would still make profits, with a minimum price of just $55,800. However, it may seem grim that apart from the S21 miners, the rest are about to go underwater. However, this is nothing new for the industry.
As the chart below shows, the 2020 halving put S9 owners in the red. This underwater state continued for a while for these miners, but with the bull rally, the price rose enough to more than offset the halved rewards.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/1712618473_123_How-will-the-Bitcoin-halving-change-the-cost-of-mining.jpeg" alt="bitcoin Halving 2020″ width=”1558″ height=”1114″/>
The effect of the 3rd halving on miner floor prices | Source: twitter.com/ki_young_ju/status/1777242919659020429/photo/1" target="_blank" rel="noopener nofollow">@ki_young_ju on x
In fact, this time the situation is undoubtedly better for miners, as bitcoin is already in the middle of a bull run. With only 11% growth from the current spot price, S19 Pro miners would reach the post-halving breakeven level.
btc Price
At the time of writing, bitcoin is trading at around $72,100, up more than 3% over the past week.
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Looks like the price of the coin has sharply surged over the past day | Source: BTCUSD on TradingView
Featured image by Brian Wangenheim on Unsplash.com, CryptoQuant.com, TradingView.com chart
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