Cryptoverse: Bitcoin miners make money ahead of ‘halving.’ While the sun is shining, bitcoin miners are generating money. With the recent surge in cryptocurrency prices, the industry has emerged from its slump. Currently, mining businesses are hurrying to lock in earnings before the “halving” of Bitcoin, which would see rewards for creating tokens halved.

The next halving, which would slow the issuance of Bitcoin—the total quantity set at 21 million, of which 19 million have already been mined—is anticipated to occur in April 2024.

Gregory Lewis, analyst at brokerage BTIG that tracks the top 13 U.S.-listed bitcoin miners, stated there is “a lot of urgency to plug rigs in ahead of the halving.”

According to cryptocurrency platform Blockchain.com, Bitcoin’s hash rate—a measurement of the processing power required to produce a coin—has reached an all-time high. This implies that miners must exert increasing force and speed in the challenging arithmetic problems that yield bitcoins; according to J.P. Morgan analysts, the hash rate has risen to all-time highs for 11 months, with an exceptional spike in October.

ACTING OUT THE GAME

After months of stagnation, Bitcoin has increased by almost 37% in the last month to nearly $37,000. This surge has motivated miners to connect their potent computers to solve problems and sell freshly generated coins.

According to data from blockchain.com, miners’ average monthly income rose gradually this year and peaked on November 11 at $32.46 million, an 18-month high. Mining, a very energy-intensive operation, is still not as profitable as it was at its peak in 2021.

According to the mining data platform Hashrate Index, a measure of miners’ revenue from utilizing one Peta hash per second of processing power in a day, it has increased to over $81 from $70 at the beginning of November. However, it is still well behind a peak of $127 in early May.

There are six months left before miners’ share of rewards is cut, so they’re searching for strategies to maintain their profits in this fiercely competitive market.

“Every halving forces miners who aren’t playing that game well enough to get washed out,” stated Sazmining’s CEO, William Szamosszegi.

ACHIEVING CHANCE

After previous halvings, bitcoin prices have usually increased. Twelve months after the initial price cut in 2012, it shot up to $126. It grew from $654 to $1,000 in just seven months following the second halving in 2016 and from $8,570 to $18,040 in the same period in 2020.

Miner payouts for Bitcoin dropped to 6.25 bitcoin per block during the third halving in 2020, and the next one is scheduled to drop to 3.125 bitcoin in April.

The current mining fee for a block is $231,250. According to Matteo Greco, an analyst at Fineqia International (FNQ.CD), a digital asset investment firm, many mining businesses were increasing their hash rate power and modernizing their equipment to remain competitive.

Some players have resorted to shifting their operations to Central American nations with lower energy costs, and governments are more accepting of cryptocurrencies to preserve their profit margins.

Ludovic Thomas, portfolio manager at Swiss-based Criptonite Asset Management, which invests in digital assets, says, “It’s too early to say if all bitcoin miners are out of the woods.” “Profitability increases always lead to network hash rates and difficulty increases.”