Throughout more than a decade, the periodic Bitcoin (BTC) halving phenomenon has pleased early Bitcoin holders while instilling apprehension in inefficient crypto miners.
Although some may harbor hopes for an end to the profitability cuts caused by halvings (which have even led to the bankruptcy of companies in the past), most miners concur — it’s what sets Bitcoin apart, and it’s here to stay.
“As miners, we welcome halvings and hold them dear — but naturally, we also hold a bit of apprehension towards them,” remarked Kristian Csepcsar, head of messaging at the Bitcoin mining infrastructure firm Braiins.
There have been apprehensions that the Bitcoin halving event, scheduled for April 20, could potentially force some Bitcoin miners out of business — particularly if the Bitcoin price fails to surpass the mining cost.
“Miners embody the true spirit of Bitcoin,” Csepcsar noted. “Therefore, even though halvings exert extreme pressure on the mining industry as a whole, we all comprehend why halvings are an essential element of the Bitcoin framework.”
Source: Braiins
Certain Bitcoin mining companies such as Hut 8 articulated their perspective on the halving as an occasion to intensify expansion efforts and fortify competitiveness, as per CEO Asher Genoot.
“We have readied ourselves for the halving with a comprehensive restructuring of our operations and focus on operating as a low-cost entity,” Genoot relayed to Cointelegraph.
Genoot highlighted that Hut 8 engages in mining “only when it proves profitable” through its exclusive software and maintains a robust financial standing with over 9,100 BTC to support stability while investing in growth.
Jaran Mellerud, co-founder of Hashlabs Mining, expressed the viewpoint that Bitcoin miners might appreciate the idea of eliminating the halving. Nevertheless, he emphasized that the Bitcoin network is not governed by miners, but by node operators:
“Bitcoin was not devised for the miners, but for the holders.”
Is it feasible to eliminate halving?
Technically, like any alteration to Bitcoin, it is conceivable to forgo the halving through a hard fork.
Nonetheless, the prevailing belief is that achieving the consensus required to usher in the change would be “close to impossible,” as argued by some, contending that the resulting outcome would no longer truly be Bitcoin.
“It would compromise one of the fundamental aspects that every Bitcoin enthusiast reveres about Bitcoin: the fact that it will have a lower supply inflation rate compared to gold and will continue this trend of deflation,” Batten articulated to Cointelegraph.
“One of the key attractions of Bitcoin to investors is its limited supply of 21 million coins, and this is what truly differentiates Bitcoin,” added Jaran Mellerud, co-founder of Hashlabs Mining.
Mellerud hinted that the Bitcoin market cap would likely be considerably smaller without halvings and restricted supply, and miners would not reap the benefits of the higher block subsidy.
Bitcoin inflation rate over time. Source: BitcoinBlockHalf
Csepcsar from Braiins argued that eradicating the halving from Bitcoin’s code is virtually unattainable.
“It is practically impossible to effect such a significant change to the core architecture of Bitcoin in this time and age,” Csepcsar revealed, adding:
“Reaching a consensus among everyone and altering such a core tenet of Bitcoin is implausible within a short timeframe such as a few years. The scenario further down the line, say in 10 years or more, is a different matter, and currently, there is no definitive answer to that.”
Although some miners may endorse the notion of abolishing halvings, full nodes may oppose it, and nodes have substantial authority over the Bitcoin network, according to Nicholas Safford, general partner at New Layer Capital.
“If a group of miners were to propose such a change, they would have to initiate a hard fork on the Bitcoin network, and at that juncture, the new digital currency would no longer be considered Bitcoin,” he clarified.
Miners dread the halving, yet they do not despise it
Historically, Bitcoin halvings have been associated with bullish sentiment as BTC prices surged to record highs following halvings. Nevertheless, there exists a concern that the halving could elevate the operational expenses of Bitcoin mining, thereby impacting profitability.
On the day of halving, for a miner whose mining cost for 1 BTC stood at $35,000 per BTC, the cost would abruptly double overnight to $70,000 per BTC, as explained by New Layer Capital’s Safford.
Miner revenues after halvings. Source: Visual Capitalist
“In such a scenario, this miner would no longer operate profitably since the market value of 1 BTC — currently hovering around $65,000 — would no longer be sufficient to cover the cost of mining 1 BTC,” he remarked, further stating:
Related: Bitcoin must maintain a value above $80,000 to sustain mining profitability post-halving
“The halving inevitably results in the exit of several miners with unsustainable high costs — due to high electricity rates, less efficient ASICs, high overheads, among other factors — from the network.”
Hence, it is probable that Bitcoin halvings are here to stay
Industry leaders and proponents are confident that halvings ultimately prove advantageous and are a permanent fixture.
“Halvings serve as the economic stimulants that guarantee a smooth journey towards the 21 million Bitcoin supply ceiling and the necessity for ongoing enhancement in energy efficiency,” Bitfarms’…
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