Data provided by Ki Young Ju, the CEO of CryptoQuant, reveals that the cost of mining using Antminer S19 XPs will double from $40,000 to $80,000 following the Bitcoin halving in mid-April.
The Bitcoin halving is a significant event that takes place approximately every four years, or after every 210,000 blocks. During the halving, the block reward earned by miners is reduced by half.
Aside from its indirect impact on the price of Bitcoin (BTC), the halving event also greatly influences miner behavior. This is because the cost of mining doubles in order to earn the same amount of BTC.
After the halving in May 2020, the cost for miners to continue mining profitably exceeded $30,000. However, the price of BTC also reached a new all-time high of $69,000 during the same period.
As of April 6, the average cost of Bitcoin mining stands at $49,902, while the BTC price is currently above $70,000. After the halving on April 20, the average mining costs will rise above $80,000. For miners to remain profitable, the BTC price must trade higher than this threshold.
It is worth noting that the price of BTC has historically experienced a substantial surge after each halving. Following the halving in 2012, the price of Bitcoin skyrocketed by approximately 9,000% to reach $1,162.
Similarly, after the 2016 halving, the price of Bitcoin surged by about 4,200% to hit $19,800. After the most recent halving in 2020, the price of Bitcoin rose by almost 683% to $69,000.
Despite concerns about potential business closures after each halving, miners have managed to remain profitable. However, the halving events render many mining machines obsolete as they cannot compete with the high demand for hashing power.
Following each halving, there is a period when the price of BTC stays below the profitable threshold for miners. This period is marked by uncertainty and an increase in the sale of mining rigs. Consequently, many small-scale and individual miners often go out of business.
However, as market supply decreases and demand increases, the price of BTC eventually rises above the average mining costs, providing an opportunity for miners to regain profitability.
In summary, the upcoming Bitcoin halving will lead to a doubling of mining costs using Antminer S19 XPs. While this may pose challenges for miners, historical trends suggest that the price of BTC has the potential to increase significantly after the halving, ultimately benefiting the mining industry.