- The upcoming Bitcoin halving will reduce mining rewards, potentially making some miners unprofitable if Bitcoin’s price does not rise enough to offset the lower rewards.
- Miners with the highest costs, like Argo Blockchain and Hut 8, face the greatest risk of unprofitability at current Bitcoin price levels according to a report.
- While the halving causes uncertainty, factors like hedging strategies, high Bitcoin prices, and new entrants like Swan Mining may help miners manage the transition.
The upcoming Bitcoin halving will reduce mining rewards, potentially making operations unprofitable for some miners if Bitcoin’s price does not rise enough to offset lower rewards.
Potential Fallout From Halving
According to a recent report from Cantor Fitzgerald, 11 major publicly traded Bitcoin mining companies may struggle to operate profitably after the halving if Bitcoin’s price stays around $40,000. The halving will cut mining rewards from 6.25 BTC to 3.125 BTC per block. With lower rewards but steady costs, miners’ profit margins will shrink unless Bitcoin’s price rises dramatically.
Miners With High Costs Most at Risk
Miners with the highest costs face the greatest risk of unprofitability. Per Cantor Fitzgerald’s analysis, Argo Blockchain and Hut 8 could become unprofitable at current Bitcoin price levels due to their high per-coin costs of $62,276 and $60,360 respectively. Only Bitdeer and CleanSpark were expected to remain profitable at $40,000 BTC post-halving.
Miners’ Hedging Strategies
While lower rewards clearly pressure miners’ profits, many miners use derivatives and other strategies to hedge against price swings. Dan Rosen of Luxor Technologies noted miners routinely utilize hash rate futures, options and other tools to smooth out volatility and protect incomes.
Swan Bitcoin Launches Mining Arm, Eyes Public Listing
In another recent mining development, Swan Bitcoin revealed its new mining unit, Swan Mining. Swan Mining has already mined 750 BTC since its stealth launch in mid-2022. With 45 EH/s currently and equipment to reach 8 EH/s soon, Swan is now targeting a public listing within 12 months. Swan’s mining arm uses no debt financing and is segregated from other Swan units.
The halving remains a source of uncertainty for miners. But with high Bitcoin prices, innovative new entrants like Swan, and a variety of hedging tools available, miners appear well-positioned to manage the transition and take part in Bitcoin’s next growth phase.