Mining difficulty is approaching? The halving of Bitcoin production will push mining costs over $10,000

With less than 87 days left until Bitcoin's block reward halving, the cryptocurrency community is optimistic about the event, believing that the third halving will follow historical trends and push the price to new all-time highs. However, for the mining industry directly impacted by the event, the halving is more like a timed bomb that will double mining costs.

• Post-Halving Cost Estimated to Reach at Least 12,525 USD
• Miner Crisis: Increasing Mining Difficulty, Halving of Bitcoin Output

Bitcoin Block Reward Halving

The Bitcoin network relies on miners to validate transactions through the proof of work mechanism and receive rewards. The Bitcoin network undergoes a block reward halving every 210,000 blocks, with the next one expected to occur at block height 630,000, around mid-May this year.

Currently, the Bitcoin network produces an average of 144 blocks per day, with each block rewarding 12.5 bitcoins, resulting in 1,800 new bitcoins daily. After the halving, the mining reward will decrease to 6.25 bitcoins per block, generating 900 new bitcoins per day.

Despite the mining industry operating with healthy returns due to Bitcoin's overall surge in 2019, as more people join and mining efficiency increases, the hash rate continues to hit new highs, leading to increased mining difficulty. Not to mention, under the halving scenario, if Bitcoin fails to reach a price corresponding to the cost, miners may face a "miner crisis."

Mining Costs Post-Halving

According to a report from the cryptocurrency research firm TradeBlock, the average mining cost per bitcoin may rise to $15,082 post-halving. Miners will need to cover double the current calculation costs and increased electricity expenses to acquire the same amount of bitcoins as before, more than double the current mining cost of $6,851.

TradeBlock indicates that if the hash rate continues to grow at its current pace and miners upgrade a portion of their mining rigs (30%), the cost will reach $15,082. If the hash rate remains relatively stable, the cost per bitcoin would be around $12,525.

JPMorgan once described Bitcoin mining costs as the cryptocurrency's "intrinsic value." Just like how a doubling of costs for oil drillers today, coupled with falling oil prices, could render operations unprofitable and force them to halt until oil prices rise again.

In fact, industry experts hold contrasting views on whether the so-called "miner crisis" will materialize. However, looking back at past halving events, Bitcoin has experienced rapid development in price and network strength post-halving. Nonetheless, this is only the third halving in history, and using the previous two as reference may not be entirely fair. Regardless of the outcome, the attention surrounding this halving is undoubtedly unprecedented.

Related Reading

• Halving Market Conditions Might Mark the Beginning of Hard Times for Bitcoin Miners
• Bitcoin Rating Upgraded to "A-" by Weiss Ratings: Eases Past 20,000 after Halving

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