According to Ki Young Ju, the CEO of CryptoQuant, the current cost of mining will rise after the Bitcoin halving event takes place in mid-April.
Currently using Antminer S19 XPs, the cost of mining Bitcoin is around $40,000 and it will increase to $80,000 after the halving.
The halving impact
A milestone event, the Bitcoin halving occurs after every 210,000 blocks have been mined, which takes almost four years. This event reduces the block rewards that miners earn by half.
Not only does the halving event have a significant impact on the price of Bitcoin, but it also impacts miner behavior because mining costs increase twofold for earning the same amount of Bitcoin.
After the halving occurred back in May 2020, miners saw the price to continue mining profitably surpass the $30,000 mark.
During the same cycle, the price of Bitcoin had also pumped to reach its previous all-time high of $69,000.
As of April 6th, 2024, the average cost of mining Bitcoin has reached $49,902 and at that time, the price of Bitcoin was above the $70,000 mark.
Once the halving happens on April 20th, the average mining costs are expected to surpass $80,000. Hence, the BTC price needs to trade higher than the cost for miners to continue working profitably.
The price
Historically, there has been a multifold jump in the price of Bitcoin after the halving event. After the halving in 2012, the price of Bitcoin had recorded a staggering 9,000% increase to reach $1,162.
After the halving in 2016, there had been a 4,200% increase in the price of Bitcoin, as it reached $18,900.
Likewise, after the halving in 2020, there had been a 683% increase in the price of Bitcoin that had pushed it up to $69,000.
The aftermath
After each halving, there are fears that miners will go out of business, but they have managed to remain profitable.
It is also important to note that many mining machinery becomes obsolete after the halving event because they are unable to compete with the high hashing power demand.
After each halving, there is also a period when the price of Bitcoin stays below the profitable price of the miners.
This is a time when there is considerable uncertainty due to which a high number of mining rigs are sold. Moreover, many lone, or small miners end up going out of business.
However, the declining market supply eventually pushes up the demand for Bitcoin, which drives up the price.
Eventually, the price ends up rising higher than the average cost of mining, which makes the process profitable for miners.
This time around, Bitcoin prices would have to stay above the $80,000 mark for miners to stay profitable.
There are already concerns about many mining companies going out of business because they will not be able to keep up with the higher costs.