Monday Mining Metrics: 1 Month Until Halving!

Bitcoin Mining Update - 3/18/2024

1 Month Until Halving

We are now in the final phase of the 6.25 BTC Subsidy epoch.

On approximately April 20th, 2024, the amount of new BTC entering circulation will drop to 3.125 every 10 minutes (~450 per day).

This event will, of course, have a serious impact on Bitcoin miners. Historically, the best way for miners to protect themselves from the decline in revenue is to upgrade to the most efficient ASICs on the market. Read our report on this exact topic to learn more about halving dynamics.

Mining Difficulty

There are two remaining difficulty adjustments between now and the halving; with the next adjustment projected to be negative.

However, we’re only ~¼ of the way through this difficulty epoch, and the projected adjustment is slowly rising. If mining difficulty does adjust down, it will be only slightly.

The most important adjustment in the near future is the one immediately after the halving. The weakest miners, highest energy costs, and least efficient machines, on the network will be forced to unplug, allowing surviving miners to benefit from marginally lower difficulty.

Hashrate Growth vs Price Growth

The most opportune time to be a Bitcoin miner is when the BTC price is growing faster than mining difficulty. In other words, when your revenue is increasing at a faster rate than your costs.

Over the past 90 days, price has increased by ~53% while difficulty has increased by ~21%. 

There is a vast discrepancy between the velocity at which price can grow vs mining difficulty. When the price moves, it moves quickly. All that is required is a new wave of demand relative to illiquid supply, and the marginal bid pushes price up many multiples in short order. Conversely, growth in mining difficulty requires the development of real-world infrastructure, ASIC manufacturing, and ASIC deployment. While difficulty growth is relatively constant, it occurs at a much slower rate than price appreciation.

Regimes in which price growth outpaces difficulty growth are the most important times to be a Bitcoin miner. Ultimately, difficulty catches up to price growth.

Increase in price → more incentive to mine → more investment made into mining → future difficulty growth.

Incumbent miners are able to capitalize on the elevated profit margins prior to difficulty catching up. The most successful miners this bull cycle will be those that have machines plugged in already, or who purchase them, turnkey, in the near future, before BTC continues its bull run.

Mempool & Transaction Fees

Transaction fees are low relative to where they were a few months ago, but it seems unlikely that the mempool will clear to 1 sat/vByte before the halving.

Fees are directly proportional to the demand for Bitcoin block space. Continued price appreciation will drive demand for block space higher, and fees will consequently increase. Moreover, there will likely be a surge in fees during the halving as the ordinal community will be keen on inscribing data into the early blocks of the 2024-2028 epoch.

Right now is a great time to consolidate UTXOs, allowing you to save on future transaction fees. If that sounds like a different language to you, watch this video. Understanding UTXOs, and consolidating them at opportune times, is non-negotiable if you hold BTC in self-custody.

Blockware Direct ASIC Pricing with Hosting

For those seeking to purchase ASICs in bulk (with or without hosting), contact sales@blockwaresolutions.com or reach out here.

We can help you secure all of the top ASICs currently on the market; Antminer S21s, S19 XPs, and S19k Pros.

All machines are new and payment includes tariffs, duties, and shipping.

Contact sales@blockwaresolutions.com or reach out here.

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All content is for informational purposes only. This Blockware Intelligence Newsletter is of general nature and does consider or address any individual circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal, business, financial or regulatory advice. You should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.