Bitcoin price halving: How miners are a key factor in the surge

The second Litecoin halving will take place on August 6, while the next Bitcoin halving will take place in less than a year. We have already analyzed historical price behavior during halvings: but how do miners influence market prices?

Miners invest in specialized equipment to mine coins, and like any other industry, they need to make money. During the block reward halving, their income is cut in half. If mining becomes unprofitable, they will need to shut down their equipment - and will only reinvest when the price rises back above the break-even point.
So when the halving happens, miners really face two scenarios:
1. Bitcoin price rises to meet miners’ revenue expectations and maintain the status quo.
2. Prices did not rise, and miners were forced to close. Only mining farms survived, and the mining industry was temporarily centralized.
If the hash rate of BTC (or LTC) drops low enough (remember, this is a function of the mining energy being invested in that activity), then the difficulty of mining will become easier – allowing more miners to come back online because it will become more profitable again.
Keep in mind that given that miners’ block rewards are cut in half, they will have fewer Bitcoins to sell to the market each day.
So, are rising prices a self-fulfilling prophecy?
In short: if we look at the propensity of miners to market their rewards, that’s probably the case. As the price rises, miners have less block rewards to sell. And fewer sales by large entities means it’s easier for the price of Bitcoin to rise.
Miners control a lot of the selling pressure in the market. A good way to measure how much Bitcoin is actually bought and sold (not just traded) each day is to look at the volume on Coinbase Pro, a popular online exchange.
According to data from Coin Market Cap, BTC/USD trading volume on Coinbase Pro averages $55 million. If the price remains constant, we can roughly estimate that half of this volume is selling pressure.
On average, 144 blocks are mined per day, which gives miners a daily reward of $1.3 million at a price of $9,000 per ton. As the price of Bitcoin falls, miners need to sell a higher percentage of their block rewards to remain profitable. If all the Bitcoin mined each day were sold on the open market, this would add 5% of selling pressure, which would be enough to drive down the price of Bitcoin.
When do miners need to start selling?
When the cost of mining a block approaches the break-even point, miners need to sell all their rewards. At current block prices, this is equivalent to about $35,000 per Bitcoin, but miners are currently selling more Bitcoin on the market than they will after the halving.
It is almost impossible to predict what the hash rate will be after the halving, but a good estimate for the breakeven point would be $7,000, meaning the price would need to remain above this level before the halving to prevent significant selling pressure.
Miners can collectively influence the price based on their sales behavior (although this does not necessarily mean a joint effort). If miners sell fewer Bitcoins, the price of Bitcoin may rise, and as Bitcoin trades at a higher price, the block reward will decrease and miners' mining operations will still be profitable.
What will happen in the long run?
Maria Shen found that the historic Bitcoin halving phenomenon caused a short-term drop in hash power but had no long-term impact; but this was because the price of Bitcoin had been rising to encourage more miners to gradually return to the network. It can be assumed that this was at least partly due to miners' selling behavior.
As we have seen in the past, it is important that we see a sustained hash rate to achieve the price increase post-halving predictions in the event of a stable or rising Bitcoin price. These factors limit the amount of Bitcoin that miners can sell and stimulate the rise in Bitcoin prices.
If the price of Bitcoin can stay well above $7,000 around the time of next year’s Bitcoin halving, we might just see Bitcoin go parabolic, something investors dream of.