After the halving, BTC price needs to reach $15,000 for miners to make a profit

In the past few weeks, the price of Bitcoin has dropped from a high of $10,500 in February to as low as $3,850. Although the price of Bitcoin has now rebounded back above $6,000, it is still hovering in this range.

The decline in Bitcoin prices has turned miners' profit margins negative, as the current price of Bitcoin is around $6,000, and the cost of mining one Bitcoin has risen to $7,300 due to the increase in hash rate. According to the latest report from crypto analysis company TradeBlock, after the Bitcoin halving, the cost of mining Bitcoin will further increase to between $12,000 and $15,000.

After the 2012 halving, miners’ profit margin was 6%

Every four years or whenever the block count reaches 210,000, Bitcoin undergoes a halving event with new supply. The first halving took place in November 2012.

Before the halving in 2012, the Bitcoin network hash rate rose to a high of 27 Th/s. The increase in hash rate means that the resources used to maintain the network have also increased accordingly. As the resources used for mining increase, the efficiency or mining cost also increases.

In order to ensure normal profitability for miners, an increase in hash rate requires a corresponding increase in Bitcoin prices.

Three months before the halving in 2012, the equilibrium cost of mining one Bitcoin was $4.45, and Bitcoin was trading at about $9.50 at the same time. After the Bitcoin halving, the network hash rate reached a peak, and the halving caused the overall cost of mining one Bitcoin to jump to $12.68. At that time, the Bitcoin price also rose to $13.50, and miners were profitable.

After the actual halving, the network hash rate dropped, but the drop was not large and the decline did not continue.

After the 2016 halving, miners’ profit margin reached 33%

Three months before the 2016 halving, the hash rate once again reached a new high of 1,250,000 Th/s. At the time, the cost of mining one Bitcoin was about $217, and the price of Bitcoin was $400. After the halving, the network hash rate continued to rise and reached another new high.

Around that time, Bitmain introduced its more efficient miner, the Antminer s9.

TradeBlock estimated that the break-even cost after the halving was $453, and considering that the price after the halving was $600, miners were profitable.

The profit margin before halving this time is -16%

Now, the third reward halving will occur at a block height of 630,000. This halving in mid-May will reduce the reward for miners from 12.5 coins per block to 6.25 coins. This time, Bitmain also released its latest Antminer s17 this year. The latest mining machine can increase the hash rate by 27 Th/s, but it will also consume $600 or more and consume more power than the existing mining machine. 480 w.

This brings the total cost of mining one Bitcoin to $7,300 before the halving. However, after the halving, if the hash rate continues to increase at the same rate as in the past three months, the estimated mining cost after the halving will be $15,100, and if the hash rate remains constant, the cost will be $12,600.

Before the 40% drop in Bitcoin prices, miners were still living quite comfortably, with high profit margins. But since the recent Bitcoin price crash, miners’ profit margins have fallen to -16%, and if miners want to make a profit, the price of Bitcoin needs to jump to more than $15,000.

Unfortunately, the past two halvings did not experience a crisis like the new coronavirus, so they cannot provide us with more evidence. (Scallion)