How Will Bitcoin Halving Change Mining Cost?
With the Bitcoin halving coming soon, miner expenses are about to change. Here’s, in numbers, how the floor prices would stand for popular rigs.
Bitcoin Halving And Its Influence On Floor Prices Of Mining Machines
The halving is a periodic event on the Bitcoin network where the block rewards received by the miners for successfully solving a block are permanently cut in half. This event automatically goes through every 210,000 blocks, or approximately every four years.
The reason the halving exists is that the block rewards serve as the only way to introduce new BTC tokens into circulation, so by periodically slashing them in half, the cryptocurrency’s production rate can be diminished, and thus, its inflation can be controlled.
Supply-demand dynamics dictate that the rarer is an asset, the higher should be its value. The halving ensures that Bitcoin becomes scarcer with each event, as only half the amount enters into the supply following it.
The next halving is set to go live in about 11 days, meaning that the supply is about to be tightened further. The current block reward for the cryptocurrency stands at 6.25 BTC, so it will go to 3.125 BTC following the halving.
While the halving is positive for the asset in terms of its economics (at least on paper), its existence is troublesome for miner financials. This is because of the fact that the block rewards usually make up the majority of the miners’ income.
In a new post on X, CryptoQuant founder and CEO Ki Young Ju has discussed about how the BTC halving is about to change mining floor prices.
The below chart shows the trend in the floor prices for some of the popular mining rigs on the market:
The data for the floor price of S19, S19 XP, and S21 over the last few years | Source: @ki_young_ju on X
As displayed in the above graph, the Antminer S19 currently has a floor price of $54,900, meaning that the miners who have these rigs installed in their farms would only break-even when the BTC price is at $54,900.
The S19 XP, which is common among US-based miners, has a floor price of $40,000 right now. The efficient S21 is currently the most profitable at $27,900. As mentioned before, though, these are about to change with the halving.
The costs would double for all of these miners, with the users of the popular S19 XP going underwater, with their cost of production jumping to $80,000. It would also be even worse for the S19 owners, who will only break even with the price at $109,800.
Those who invested in the latest Antminer S21, though, would still remain in profit, with their floor price hitting just $55,800. Nonetheless, It may sound bleak that besides S21 miners, the rest are about to go underwater. This is, however, nothing new for the industry.
As the chart below shows, the 2020 halving put the S9 owners into red. This underwater status continued for a while for these miners, but with the bull rally, the price surged enough to more than make up for the halved rewards.
The effect of the 3rd halving on miner floor prices | Source: @ki_young_ju on X
In fact, this time around, the situation is undoubtedly better for the miners, as Bitcoin is already in the middle of a bull run. With only an 11% growth from the current spot price, the S19 Pro miners would hit the post-halving break-even level.
BTC Price
At the time of writing, Bitcoin is trading at around $72,100, up more than 3% over the past week.
Looks like the price of the coin has sharply surged over the past day | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, CryptoQuant.com, chart from TradingView.com
