Profitability of Bitcoin mining may not decrease following halving

Bitcoin mining profitability is expected to remain stable after the upcoming Bitcoin halving, according to Laurent Benayoun, the CEO of Acheron Trading. The halving, which is scheduled for April 20, will reduce block rewards from 6.25 BTC to 3.125 BTC. In previous halvings, smaller mining firms were negatively impacted by the decreased rewards and were forced to shut down. However, Benayoun believes that this time will be different due to the rise in network fees driven by Ordinals inscriptions and Bitcoin-native decentralized finance (DeFi), also known as BTCFi. Network fees are transaction fees paid to incentivize miners to include transactions in the next block. Currently, average Bitcoin transaction fees are $4.88 per transaction, a decrease from $16.13 per transaction a month ago. However, these fees have risen by over 86% in the past year. According to Joe Downie, CMO of NiceHash, Bitcoin mining companies will generally remain profitable as long as the Bitcoin price stays above $70,000. Despite a recent drop in price to $66,851, Bitcoin has been trading below the $70,000 mark since April 1. In addition to price, the profitability of mining firms will also depend on the quality and energy efficiency of their equipment. On March 6, Bitcoin miner revenue reached its second-highest level in history at $75.9 million, driven by the price reaching a new all-time high above $69,200. Benayoun believes that due to Bitcoin’s price increase and the higher network fees, fewer mining firms will be forced out of business compared to previous cycles.