There are currently 19 million Bitcoins mined, or 90% of the supply. The next “halving” is expected to take place in April 2024. Gregory Lewis, an analyst at brokerage firm BTIG, said people are rushing to add Bitcoin mining machines ahead of the event.
According to blockchain.com , Bitcoin's hashrate has skyrocketed to an all-time high. This means miners need more power and faster math to earn a Bitcoin.
Analysts at JP Morgan estimate that the hashrate has reached record highs for 11 consecutive months, including a sharp increase in October 2023.
In October, Bitcoin rose about 37% after a long period of gloom
However, mining still cannot be as profitable as it was during Bitcoin's heyday in 2021.
A measure of miners' earnings from using 1 petahash per second of computing power in a day has risen to more than $81, from $70 in early November but still well below its peak of $127 in early May, according to Hashrate Index.
With six months to go until the next halving, Bitcoin miners are looking to protect their profits in an increasingly competitive environment.
Sazmining CEO William Szamosszegi said that halvings will force miners who cannot afford to invest out of the game.
Historically, Bitcoin prices have surged after each halving. Six months after the first halving in 2012, Bitcoin prices rose from $12 to $126. After the second halving in 2016, Bitcoin rose from $654 to $1,000 in seven months. In 2020, Bitcoin prices also rose from $8,570 to $18,040.
The third halving in 2020 lowered the miner reward to 6.25 Bitcoins per block, which will drop to 3.125 Bitcoins in April 2024. It currently earns $231,250 to mine each block.
Many Bitcoin miners are upgrading their equipment and increasing their hashrate to stay competitive, said Matteo Greco, an analyst at digital asset investment firm Fineqia International. To preserve their profit margins, some players have moved operations to Central American countries where mining costs are affordable and governments are more friendly to cryptocurrencies.
It is too early to conclude that Bitcoin miners have overcome the difficult times, said Ludovic Thomas, portfolio manager at Criptonite Asset Management. He noted that increasing profits often go hand in hand with increases in Bitcoin hashrate and mining difficulty.
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