Thousands of Bitcoin miners face bankruptcy after halving

Another halving of the main cryptocurrency – Bitcoin, is scheduled for mid-May and will take place on approximately the 14th. After the ‘split in two,’ the size of the reward for the mined MTC unit will be reduced by exactly 50%: from $12.5 to $6.25. 

For miners, this means a loss of profit, and halving jeopardizes cryptocurrency mining as a field of activity. It is highly likely that a lot of Bitcoin miners will face bankruptcy after the halving occurs.

Already today, miners are changing equipment to the more powerful machines to mine more coins in a shorter period of time, and are also looking for ways to get cheap electricity.

This was told by one of the creators of ProgPoW Kristy-Leigh Minehan and co-founder and CEO of Braiins Pavel Moravec. According to Minehan, miners began preparing for the halving 6 months before the expected date. First of all, mining companies decided to upgrade their computing power and purchased new ASIC machines, such as Antminer S17 and S19. It allows you to mine more coins in a shorter period of time. Besides, modern technology will enable you to save electricity spent on the extraction of coins.

As Moravec explained, Braiins is already supplying mining equipment with new equipment that saves up to 20-30% of electricity.

Consolidation of miners

Mining used to be a very easy process for blockchain enthusiasts. Almost anybody could mine cryptocurrencies with their Personal Computer, which gave the technology the decentralized feeling it truly has. However, nowadays effective mining is connected with millions in costs, huge real estate for the hundreds of miners that require constant monitoring, cooling, and technical adjustments. Not to mention the rate at which equipment becomes outdated.

Mining has also proven to be a very unique method of proving legitimacy. Right around the time when the Bitcoin Era scam controversy was surrounding the company. Displays of mining equipment and history managed to convince most accusers that the company was legitimate. Why? Because thanks to the unique setup of the miners, there was still a possibility to trace all of the coins in circulation from their farm. This was seen as an amazing opportunity by many other companies as well, which is one of the many reasons why mining is now mostly associated with companies rather than individual people.

In addition, experts agree that today mining has become a full-fledged area of activity. Currently, agreements have been reached between the governments of the countries of the world, utilities, and miners regarding the provision of electricity to cryptocurrency mining farms. This mutually beneficial cooperation will develop further. 

For example, today miners buy excess electricity from manufacturers at special rates. This allows generating companies to receive additional profit, and for miners – acceptable conditions for activities. According to Minehan, in the next few years, mining will be actively developed in Georgia, North America, and Europe. China will remain the leader in cryptocurrency mining.

According to Minehan, cryptocurrency mining has reached such a historical point that even state governments are ready to support mining. They understand that bitcoin will not go anywhere, so they are trying to create conditions for cryptocurrency mining and get additional profit from it.

But while talking about the benefits of mining and innovations, it is anticipated that miner revenue most likely will drop to $6.7 million per day. In the case of the previous two halvings in 2012 and 2016, the price of bitcoin began to rise slowly about one year before the events. This time we are not so lucky: the cash withdrawal caused by fears related to the coronavirus led to a drawdown in the cryptocurrency and traditional markets.

Conclusion

The implications of the halving are visible to the miners. Those who are running inefficient hardware will face tremendous pressure, in particular miners who are hit by recent market gyrations. On the other hand, miners with healthier financial outlooks – in particular the businesses that can secure and stand up more effective hardware– are likely to find themselves in a more decent position.