The bitcoin mining industry is about to hit a major brick wall when the next halving hits, according to a recent report from Galaxy Digital.
The upcoming halving is expected to reduce the BTC block reward, meaning that miners who successfully add more blocks to the Bitcoin network will be receiving $3,125 Bitcoin per block, instead of the $6.25 BTC they have received for the past four years.
This is set to send smaller miners straight into bankruptcy and might be especially hard on the ones who use older and less efficient machines.
Simply put, hashrate is the combined computing power of BTC miners all over the world.
According to a new report by Galaxy Digital, however, up to 20% of the current hash rate of the Bitcoin network might be going offline after the halving, as miners start to go broke from receiving half their usual income from mining Bitcoin.
The report analyzed eight types of ASICs.
For context, ASIC stands for Application-Specific Integrated Circuit.
These devices are specialized pieces of hardware, made specifically for bitcoin mining. They include models like M20S, M32, S17, A1066, A1246, and S9, as well as the newer and more efficient S19s or S19j Pros.
And according to Galaxy Digital, buying and running these models mentioned would only be profitable in terms of block subsidy and transaction fees, if BTC stayed above $45,000.
However, when the halving hits and the block rewards get halved, between 15% and 20% of the hashrate from the eight ASIC models mentioned above might be going offline, depending on the bitcoin price after the halving.
Moreover, Galaxy Digital notes that some miners may try to improve their standings by using custom machines, or may sell their old machines to miners with easier access to power, rather than going completely offline.
Aside the hashrate, the dynamics of the mining industry will also be affected by the halving. According to the report, the halving would increase competition, and ensure that only the most productive and well-funded miners will make it through.
So far, we have miners already prepared, with a few of them already upgrading their machines and buying more equipment
For instance, in December 2023, Riot Platforms paid $290.5 million for 66,560 MicroBT machines, with an option of buying another 265,000.
In the same month, Bitfarms, another public miner, increased the number of Bitmain T21 miners in its fleet to 36,000.
Overall, the upcoming halving is set to shake up the Bitcoin mining space. However, the miners who remain online will do so with stronger resolve, leading to a stronger Bitcoin network, and even more attractive price prospects.
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