A new report by analytics firm Glassnode suggests that Bitcoin miners may face significant challenges and income stress following the next block subsidy halving. The report highlights the surge in Bitcoin miner competition, as indicated by the record-high hash rate. While miners are currently benefiting from the use of ordinal inscriptions to generate revenue, the upcoming drop in block rewards in 2024 is expected to increase the production cost per BTC and potentially put the majority of miners in severe financial distress. Glassnode provides two models that estimate the price at which miners will fall into the red, with one model projecting a doubling of the acquisition price to $30.2k.
Despite the warnings from Glassnode, some analysts, like Filbfilb, co-founder of trading suite DecenTrader, remain more optimistic about the miners’ ability to handle the upcoming halving. Filbfilb believes that miners will accumulate more Bitcoin in advance of the event to ensure prices are well above marginal cost. He suggests that miners, whether consciously or not, are collectively incentivized to drive prices higher before their revenue is halved. Additionally, the anticipation of the halving and its impact on the BTC supply may encourage smart money to buy into Bitcoin, further supporting the price.
While the report raises concerns about the financial viability of miners post-halving, it also presents differing perspectives on how miners may navigate the challenges. The impact of the halving on miner profitability remains uncertain, and it will ultimately depend on market dynamics and the behavior of both miners and investors leading up to and following the event.
