Bitcoin miners could face losses if the BTC price doesn’t reach $80,000 before the next halving in April 2024, according to a report by Fidelity Digital Assets. Despite the bullish outlook, reduced block rewards threaten miners’ incomes.
Bitcoin miners’ challenge before 2024 Halving, wen $80 000?
The mining sector Bitcoin mining had had a turbulent year, with a bear market in early 2022 leading to a 55% drop in price. Many miners had to sell their reserves, turn to artificial intelligence and even resell equipment to stay afloat. Some, however, have recently returned to the green and are building up their capacities ahead of the next Halving!
According to Fidelity Digital Assets, the forthcoming halving of block rewards in April could pose a problem for problems for miners if the price of Bitcoin does not exceed $80,000. Halving reduces block rewards by 50%, which could significantly reduce miners’ income.
If the price doesn’t reach $80,000 before halving, some miners will inevitably mine bitcoin at a loss.
Extract from Fidelity’s statement
The analysts add that difficulty adjustments tend to keep production costs close to spot prices in the absence of major movements.
Spot ETF approval and Bitcoin Ordinals offer hope to reach $80K goal
Despite these warnings, bullish stories about bitcoin have multiplied in recent months. The SEC approval of Bitcoin Spot ETF triggered institutional inflows and stimulated price rises in the second quarter of 2023.
At a current price above $50,000, miners’ revenues jumped by an average of $10 million compared with the crypto winter of 2022. However, to maintain current profits, the price of BTC must reach $80,000 before April.
Beyond the bullish momentum, Bitcoin Ordinals offer a new source of income for miners. Fidelity believes that growing interest in Ordinals in 2024 will increase transaction fees, benefiting miners despite concerns about blockchain congestion.
Although their use for NFTs may not attract long-term interest, the technology opens up new possibilities. Miners are likely to welcome the additional revenue generated by royalties.
Extract from Fidelity’s statement
While the $80,000 level represents a challenge for miners ahead of halving, the overall bullish outlook remains intact. Institutional flows and innovations like Ordinals will continue to support mining revenues despite reduced rewards. However, prices will have to soar to avoid industry losses according to Fidelity Digital Assets study.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
