Bitcoin’s 2024 Halving: Market Catalyst or Mining Consolidation, and more

07/19/2023 0 Comments

1. Bitcoin’s 2024 Halving: Market Catalyst or Mining Consolidation

Historically, Bitcoin halvings have instigated significant bull runs, yet it’s uncertain whether the 2024 event will follow this pattern given the increasingly complex market dynamics.

In a matter of months, the world of Bitcoin and digital currencies will be experiencing another historic event – the fourth Bitcoin Halving expected in April 2024. This moment of anticipation and speculation serves as a high-stakes litmus test for both Bitcoin miners and the crypto market.

It is an event that has previously catalyzed monumental market shifts and could do so again.

Bitcoin halving is a unique feature of Bitcoin’s supply algorithm, where the rewards for miners are halved every 210,000 blocks of transactions – an occurrence approximately every four years. Satoshi Nakamoto, the creator of Bitcoin, linked the BTC’s creation to its anti-counterfeiting mechanism – the complex computational mining process that validates transactions on the blockchain.

Initially, a block’s mining reward was 50 BTC; by 2024, this reward is slated to be 3.125 BTC.

The question facing us now is how this halving will impact Bitcoin and the overall crypto landscape. Historically, halvings have been associated with skyrocketing price movements. The halvings in 2012 and 2016 sparked bull runs, with BTC valuations soaring by about 8,000% and 1,000%, respectively. More recently, the 2020 halving unleashed a run that peaked with a record Bitcoin price of nearly $69,000 in November 2021.

However, numerous factors contribute to the market’s complex dynamics. Bitcoin’s price movements have often coincided with other significant events, such as broader mainstream recognition, the proliferation of initial coin offerings (ICOs) and technological advancements.

The economic climate presents a potential dampener to the halving hype, with reduced expectations of U.S. Federal Reserve interest-rate cuts and stringent regulatory scrutiny of cryptocurrencies around the world. Predicting a halving-induced bull run is far from a secure bet. As skepticism surrounding the halving’s impact gains traction, other factors including macroeconomic trends and regulatory frameworks could take precedence over shaping Bitcoin’s price than the halving.

Meanwhile, Bitcoin miners – those who actually provide the industry with new BTC – are faced with a troubling reality. Bitcoin mining, already an operation demanding substantial resources, will become even more challenging with the dwindling rewards. A Bloomberg report interviewed Jaran Mellerud, a crypto-mining analyst at Hashrate Index, who predicted:

“Nearly half of the miners will suffer given they have less efficient mining operations with higher costs.”

A considerable portion of miners could see an increase of $.08 k/h, which could signal a potential consolidation or even an exodus within the mining industry, Mellerud predicted.

Wolfie Zhao, head of research of Blockbridge, told Bloomberg that currently, public mining companies pay $10,000-$15,000 per mined Bitcoin. However, estimates suggest that mining BTC will cost between $20,000-$30,000:

“If you count in everything, the total cost for certain miners is well above Bitcoin’s current price […] Net profits will turn negative for many miners with less efficient operations.”

For the average Bitcoin holder, however, the halving’s impact will be mostly indirect. The event itself won’t change the amount of BTC in their holdings, but its potential effect on price will be the most significant.

It could also very well serve as a springboard for another cyclical bull run or bring in a period of turbulence and consolidation. While the answer remains unclear, one thing is certain: the coming months will be a defining period for Bitcoin, its miners and the global cryptocurrency ecosystem.

2. JPMorgan Shows Hurdles Ahead for Bitcoin Miners as Halving Is Getting Closer

The report highlights that the rapid growth in the Bitcoin hashrate is unlikely to continue at the same pace after the halving event.

As the next Bitcoin (BTC) halving event approaches, analysts at American investment banking giant JPMorgan Chase & Co (NYSE: JPM), led by Nikolaos Panigirtzoglou, recently highlighted its challenges for miners.

In a recent report, the analysts noted that the hashrate for Bitcoin has recently reached new all-time highs. This surge in hashrate signifies the escalating competition among miners as they gear up for the next halving event expected in the second quarter of 2024.

Challenges for Bitcoin Miners

The report points out that the event will decrease the block reward from 6.25 BTC to 3.125 BTC. This reduction will directly impact miners’ revenues, as they will earn fewer Bitcoin for their mining efforts. Consequently, miners will face a decline in their income, which raises concerns about the profitability and sustainability of mining operations.

Additionally, the report highlights that the reduction in issuance rewards effectively increases Bitcoin’s production cost. This is because, miners must cover their operational expenses, such as equipment, electricity, and maintenance, with a smaller number of Bitcoin.

Furthermore, the analysts emphasized that miners with lower electricity costs are expected to have an easier time sustaining their operations, while those with higher power costs may face challenges after the halving event is over.

Specifically, JPMorgan estimates that a 1% per kilowatt hour (kWh) change in electricity cost can lead to a $4,300 change in the production cost of Bitcoin. After the halving, this sensitivity is expected to double to $8,600, thus increasing the vulnerability of higher-cost miners.

The bank also highlights the rising competition among Bitcoin miners, reflected in the steep rise in the hashrate. The hashrate represents the total computational power dedicated to mining Bitcoin, and its increase indicates intensified competition within the mining industry.

As miners anticipate the halving event, more mining rigs are being deployed to capture a larger share of the diminishing block rewards. This influx of computational power contributes to the overall hashrate growth.

Hashrate Post-halving Event

The report highlights that the rapid growth in the Bitcoin hashrate is unlikely to continue at the same pace after the halving event. The analysts emphasized that without a sustained rise in the Bitcoin price above its production cost or a significant increase in transaction fees, the growth in the hashrate may be offset by the reduction in issuance rewards.

The potential slowdown in hashrate growth post-halving has implications for the mining ecosystem. If the Bitcoin price does not rise sufficiently or transaction fees do not increase significantly, miners may face profitability challenges. This scenario could lead to some miners exiting the market, particularly those with higher production costs or less efficient operations as we saw with series of bankruptcies last year

It is worth noting that the relationship between hashrate, Bitcoin price, and transaction fees is dynamic and susceptible to change. A persistent rise in the Bitcoin price or a considerable increase in transaction fees may encourage miners to continue investing in processing power, hence promoting hashrate growth.

How to Mine Bitcoin from Your Smartphone?

3. Learn ways to mine crypto in July 2023 on your smartphone

A mining app is the only method to utilize your smartphone to start mining Bitcoin. These mining applications enroll you in mining pools or teams of other miners who employ the hardware in your smartphone to produce a certain amount of hashrate while mining cryptocurrencies. You’ll eventually produce enough Bitcoin to exchange it for fiat money profitably.

Apps for crypto mining were previously prohibited in the Apple App Store and Google Play Store. The major cause of this is that they place a ton of strain on the processors in your phone, which can cause battery loss, battery bloating, overheating, and latency problems. The first important thing you need to know is that you cannot download (legal) mining programs from the app store on your smartphone. We will go into more depth about this later. You must ask a friend to share a crypto mining program with you because downloading them online is incredibly hazardous. All you have to do to begin mining the cryptocurrency you choose is sign into the app after downloading it, look for a mining pool to join, and join. Even though it may take a while, you will eventually obtain a significant quantity of your preferred cryptocurrency, which you can then exchange for actual money via the app.

Despite the dangers, mining can still be a practical alternative for a smartphone, especially given that many applications offer users the choice of using mine to purchase a “premium” membership that eliminates all adverts. According to a recent survey, many consumers are eager to enable crypto-mining to substitute advertisements in exchange for advantages like a better user experience. Additionally, mining may be profitable for old devices that no longer contain your data. The most effective app for mining cryptocurrency on a smartphone is MinerGate.

One of the top mobile applications for mining cryptocurrencies is MinerGate. The program is extremely safe, has a ton of functionality, and gives miners access to statistics. On the app, you can customize your Bitcoin mining settings, such as the low usage mode, which lowers your total hashrate while maintaining most of your device’s performance. MinerGate is used by over 5 million miners, demonstrating its widespread use. To guarantee you maximize your income, MinerGate also offers a 99.7% uptime rate. The app’s sole flaw is forcing you into the built-in mining pools rather than letting you join pools for a particular coin you choose.

Cryptocurrency storage is necessary in addition to mining it if you want to keep it for the long run. My top-ranked cryptocurrency exchanges, ZenGo and Revolut, which include bank-level security technologies, are where you should store your cryptocurrency if you want to keep it secure. Although neither is our preferred cryptocurrency exchange, they include an integrated wallet, which VirgoCX does not. Exchanges like Newton, Bitbuy, and CoinSmart are also highly regarded. ZenGo is free to use, so you receive the finest security available without spending any money. Additionally, ZenGo offers free crypto sending and receiving, and its round-the-clock support staff often responds to questions within five minutes.

Your crypto is safeguarded by two separately developed mathematical secret shares, one stored on your phone and the other in the cloud, thanks to ZenGo’s exclusive keyless technology. Because of this innovative structure, your money will always be completely safe and easy to access, even if your phone is lost, stolen, or damaged or if ZenGo (the firm) were to commit fraud, declare bankruptcy, or otherwise discontinue operations.

ZenGo supports over 75 crypto assets, and creating a free account takes just a few seconds. Overall, ZenGo is the next iteration of crypto; it combines the best of both worlds with the highest level of security inside a user-friendly interface.