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    How will Bitcoin Halving Affect Miners’ Profitability

    • To maintain healthy profit margins for miners, a rising hashrate is needed while newer and more efficient mining devices to reduce mining costs
    • Before halving the gross cost to mine one BTC is $6,851 and after halving $15,062 and much lower for large scale commercial mining pools like Bitmain

    Bitcoin reward halving is less than 100 days away, scheduled to occur in Mid 2020 that would see the new issuance supply of bitcoin declined by 50%. With this supply reduction, there would be changes in the breakeven cost to mine bitcoin before and after the halving.

    Digital currency research company TradeBlock tries to find “bitcoin mining profitability following ‘The Halving’ and its indication for price in its latest blog.

    Maintaining healthy Profit Margins & Reducing Mining Cost

    In 2019, commercial mining operators were operating at “healthy profit margins,” as the price of BTC jumped throughout the year.

    The network hashrate meanwhile, continued on its record run, making new highs each week as the number of resources committed to secure the network rises. But as the resources rise over time, efficiency and mining costs rise as well.

    To maintain healthy profit margins for miners, a rising hashrate is needed to correspond with a rising bitcoin price while to reduce mining costs, newer and more efficient mining devices are continuously being developed.

    Miners expecting the price of bitcoin to rise to higher levels?

    The decentralized peer-to-peer network is secured by miners who receive 12.5 bitcoin for mining each block. Currently, 144 blocks are mined on average per day that results in 1,800 new BTC per day. After the halving, the mining reward will decline to 6.35 bitcoin per block, resulting in 900 new bitcoins mined per day.

    Before the halving, the gross cost to mine one BTC at current levels with current device types are estimated by TradeBlock at $6,851. Meanwhile, the BTC price is trading at $9,800.

    After the halving, assuming the hashrate will continue to rise over the next three months at the same rate it has been for the past three months and commercial operators transition to newer models for 30% of their rigs, the cost to mine one BTC would be $15,062.

    If instead of rising to ~135,882,500 TH/s on halving day, the hashrate remains flat, the cost would fall to $12,525. However, for large scale commercial mining pools like those operated by Bitmain, the largest manufacturer of mining rigs, will have even lower breakeven cost.

    The breakeven costs, TradeBlock says indicates miners continue to increase towards which suggests miners are “likely expecting the price of bitcoin to rise to higher levels,” above $12,000-$15,000 around the halving to continue to generate a profit. In contrast, it is also likely they will reduce resources following the halving that will result in a decline in hashrate as profitability falls.

    Bitcoin (BTC) Live Price

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    AnTy
    AnTy
    AnTy has been involved in the crypto space full-time for over a year now. Before his blockchain beginnings, he worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

    [Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

    [Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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