Bitcoin Miners Prepare To Face Challenges After Block Subsidy Cuts

Bitcoin (BTC) is currently facing an estimated problem for its miners (photo: dock. Pixabay)

JAKARTA - Bitcoin (BTC) is currently facing an estimated problem for its miners after the next block subsidy cuts. A recent report from analytic firm Glassnode reveals a challenging situation for Bitcoin miners.

The rapid competition of Bitcoin miners, accompanied by a high hash rate, which is an estimate of the processing power used in blockchain, reaching its highest level. This shows unprecedented conditions for miners trying to survive at the current BTC price level.

Although revenue incentives from transaction fees (fees) have increased by 1% to 4% compared to the lowest level seen during the Bitcoin bearish market, historical standards remain low.

The hash rate increase forms the basis for future tensions. In April 2024, prizes for miners per block will drop 50%, doubling the "production cost" per BTC. Currently, around US$1,500 (Rp230.2 million), this figure will exceed US$30,000 (Rp460.4 million), above current prices.

Glassnode presents two models to estimate prices where miners as a whole will suffer losses, with models comparing publishing to mining difficulty levels.

According to the model, the most efficient miners on the network have acquisition prices of around US$15.1 thousand (Rp231.7 million). However, the model suggests that after cuts, this level will increase to US$30.2 thousand (Rp463.5 million), which is likely to result in most mining markets experiencing severe income pressure.

Previously, the model placed the average mining acquisition price of around US$24,393 per Bitcoin, around 8% below current price on September 28.

Nonetheless, some analysts are more optimistic about how miners will deal with this cut and estimate that miners will increase Bitcoin accumulation before the cuts take place.

This is supported by the hope that miners will jointly increase the price of Bitcoin before their income is reduced due to the block's subsidy cuts. Bitcoin miners are given incentives to ensure the price of Bitcoin is above marginal costs before the cuts take place.

Support will also come from "smart money" buying based on rumors of cuts and their impact on the supply of Bitcoin to be produced.