The Bitcoin (BTC) halving is just around the corner. The phenomenon will happen in less than two weeks and investors are eagerly waiting for it. The halving will cause difficulties for Bitcoin miners as they will only earn half from their work. In the past, many miners were unable to stay afloat after the halving. This time, however, profits do not necessarily have to suffer losses.
Bitcoin transaction fees could help
The fourth Bitcoin halving is near and will halve the rewards for mining a new block of transactions from 6.25 BTC to 3,125 BTC. Miners are suddenly earning half as much Bitcoin for the same work, which will logically put pressure on profitability. For miners operating on a small scale or with minimal profit margins, this can result in mining costs close to or even exceeding revenue.
However, the rewards for adding a new transaction block to the blockchain are not the only rewards for miners. They also collect any transaction costs paid.
The amount of transaction costs depends on how busy the network is. Over the past year, we have often seen that transaction costs can reach high levels. The Ordinals service, which enables BRC-20 tokens and non-fungible tokens (NFTs) on Bitcoin, launched in January 2023, has played an important role every time. In some blocks, fees were even higher than block rewards.
If the network were to become overloaded with ordinal inscriptions again, this would be a huge profit boost for miners. Laurent Benayoun, CEO of Acheron Trading, insists that the halving will be offset by an increase in network fees. He told CoinTeleGraph the following:
“In dollar terms, it is not clear that miners would be worse off after the halving, rather the opposite. The decline in mining rewards is offset by an increase in network fees.”
Why the BTC price of $70,000 is important
It would be extremely beneficial for miners if the Bitcoin price could stay above $70,000. Nice Hash Chief Marketing Officer Joe Downie told CoinTeleGraph that the production cost of mining one Bitcoin is currently around $35,000. After the halving, this value will logically double to around $70,000. At a price above $70,000, the majority could still operate profitably.
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