Good News! The Bitcoin network has already crossed its 800,000th block at the end of July 2023. With this, there is a fact that the event has marked a major milestone in the history of blockchain. Also, we need to keep in mind that only eight months are remaining until the next Bitcoin halving. It is set to happen on the 26th of April, 2024. New mining strategies have to be incorporated to keep up with the new event.
Bitcoin (BTC) halving is one of the highest-profile cryptocurrency events in the industry. This is similar to the major Ethereum (ETH) hard forks. Acting as a potential catalyst for upcoming periods of market growth, they deliver positive updates for investors.
The upcoming halving event is expected to have a significant impact on the crypto mining industry. Miners will have to devise new mining strategies to compensate for the reduced rewards resulting from the halving.
This article explores some of these new mining strategies to help the miners mine cryptocurrencies in an improved method.
The Catalyst For A Historic Bull Run
What is Bitcoin halving? Bitcoin halving occurs roughly once every four years. It is a deflationary process that halves the number of new coins in circulation by 50%. The next event, which will take place in April 2024, will reduce the block reward amount from 6.25 BTC to 3.13 BTC.
Based on past history, we think the halving event is going to be followed by a mega-bull run around the end of 2024-early 2025. When Bitcoin’s inflation rate is halved, it usually means there is more supply and more demand, which pushes the price of the cryptocurrency to new highs.
The price of Bitcoin went up by 533% after the last halving. On May 11th, 2020, the price was $8.970, and on May 11th, 2021, it was $56,670. Now that inflation has gone down and demand is increasing, we are expecting the upcoming halving on April 26 to send the price of BTC skyrocketing!
We think it is safe to say that Bitcoin will hit the $100,000 psychological threshold in 2025.
The Effect Of Halving On The Behavior Of Miners – Adjusting To The New Normal
Crypto mining is a form of block reward mining in which miners compete with each other to mine a finite number of Bitcoin (BTC) per block. This is because Bitcoin’s block time, which is how long it takes miners to make a new block, is set by the protocol to about 10 minutes on average.
No matter how high the network hash rate is, whether it is 1k hash per second or 200 million hash per second, the same number of block rewards will go to the miners. This competition encourages miners to become more energy-efficient and hardware-efficient.
With each halving of the block rewards, the trend accelerates significantly. Since it will take roughly twice as long to generate a single BTC after the next halving, miners will need to find ways to maximize their profitability. To do this, they must focus on three key elements in this area.
Consider These Cost-effective Strategies When Making Decisions
One of the most important things to consider is the price of electricity. If you want to make the most money after the halving, you will need to make smart contracts and move to lower-cost countries and regions. For example, if you change your electricity price by 1 cent per kWh, it could make a huge difference in your BTC production cost which is estimated to be $4,300!
As far as we can tell, they will have to pay a minimum of 5 cents per kilowatt-hour (kWh) in order to stay afloat after April 26.
It is also important to take into account the power efficiency of the miner’s equipment. According to the data provided by an organization, TheMinerMag’s data, a miner can reduce their daily hash cost by more than 63% if they upgrade from a 60J/TH rig to a 22J/TH rig.
Finally, miners with the highest mining efficiency and lowest electricity prices are likely to remain profitable and remain in business for the longest period of time, even in the event of a major market event such as the next halving.
Another approach that miners could take to mitigate the negative effects of the next halving is to build up a surplus of BTC in mined assets during good times. After the post-halving rally, this excess can be sold at a higher profit margin to offset the losses due to lower block rewards.
Alternatives You May Be Looking For!
The Bitcoin halving event of next year is expected to have a significant impact on miners’ BTC production costs, prompting many to cease operations. While lower electricity prices, improved mining equipment, and the prudent use of reserve capital can help to mitigate the event’s adverse effects, it is likely that alternative solutions will be taken into account.
One of the ways miners can make more money is by collecting transaction processing fees instead of block rewards.
The recent buzz around Ordinals – a protocol that gives people the power to create NFT-like coins (inscriptions) on Bitcoin – is a sign that it could become a much bigger source of income for miners in the future.
With network demand at an all-time high and more than $55 million in transaction fees paid out so far, Ordinals has pushed transaction processing profits above miners’ block rewards for the first time ever.
We think it is safe to assume that there is going to be a lot more going on at the core of the Bitcoin blockchain network that will continue to change the game and make it easier for miners to adjust after the halving.
There you have it, folks! Thanks for sticking with us. We hope that this read has been helpful to know about the new mining strategies after crypto halving or Bitcoin halving. Comment below with any valuable thoughts you may have. We would appreciate it if you did so. If you enjoyed this article, share it with your friends and colleagues!
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