According to JP Morgan strategists, the upcoming Bitcoin halving event will serve as a significant test for miners as they face reduced rewards and increased production costs. Miners with lower electricity costs are expected to have an easier time adjusting to the halving, while those with higher electricity costs may struggle in the post-halving environment. The halving event, which occurs approximately every four years, reduces the reward for mining new Bitcoin blocks by half, thus decreasing the rate of new Bitcoin creation and ensuring scarcity over time.
While the Bitcoin halving is generally viewed as having a positive impact on the price of Bitcoin, it presents challenges for miners because the production cost has historically acted as a floor price. JP Morgan analysts note that a one cent per kWh change in electricity cost leads to a $4,300 change in Bitcoin production cost, according to their model. Post-halving, this sensitivity would double to $8,600, making higher-cost producers more vulnerable.
Competition among Bitcoin miners is intensifying as the Bitcoin hash rate, which represents the total computational power used to mine the cryptocurrency, continues to increase. However, the analysts suggest that the hash rate may not continue to rise at the same pace after the halving event unless there is a sustained increase in the Bitcoin price above its production cost or a significant rise in transaction fees that can offset the reduction in issuance rewards.
As per the data by Intotheblock, the current hash rate of Bitcoin is 319.25m TH/s, whereas the all-time high was 451.91m TH/s on July 8th. The average size in bytes is approximately 1.6m, and the average difficulty stands at 53.91t along with the mining at the block heights of 840,000 and previously it was 757,214.
Several halvings are coming up, with the next halving event for Litecoin set to happen in 17 days, Bitcoin SV (BSV) scheduled for January 6th, 2024, Bitcoin Cash (BCH) for March 3rd, 2024, and Bitcoin (BTC) for May 18th, 2024.