Bitcoin halving could pump investors' bags, but a gloomy future awaits BTC miners

Bitcoin (BTC) halving is a narrative that cryptocurrency traders and investors highly anticipated because of its characteristic ability to kickstart a new phase of bullish momentum for the flagship crypto, surpassing the peak prices recorded in the previous cycle to record a new all-time high.

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Bitcoin halving countdown continues

Bitcoin (BTC) halving countdown continues, around eight months out, but traders and investors alike remain on the edge of their seats waiting to see what the new cycle will achieve. In every cycle that has passed, the event brings a fresh start to the yearlong bullish market, with Bitcoin price recording a new all-time high, preceding another yearlong bear market.

The bear market is followed by a two-year recovery period as the price attempts to reclaim the all-time high. This is where the BTC market currently stands, and investors cannot wait.

Bitcoin Halving Cycle

What is Bitcoin Halving?

Bitcoin halving is an event where the rewards for mining BTC tokens are cut in half. With every cycle, the impact of individual halving events continues to diminish as the block reward procedurally edges toward zero. The objective of a halving activity is to slow down the rate of generating new coins, thereby lowering the available amount of tokens in supply.

The previous Bitcoin halving event occurred on May 11, 2020, with the next one slated between April and May 2023. The final one is estimated for 2140, 117 years ahead. This estimate is based on the calculation that by this time, the number of BTC tokens in circulation will have attained the maximum supply of 21 million. The current circulating supply is 19,440,787 BTC, based on CoinMarketCap data.

While traders anticipate the 2024 Bitcoin halving and its expected impact to pump BTC price, miners do not share in the same sentiment. On the contrary, BTC miners and mining companies' are feeling unsettled.

The miners, serving as validators to secure the network and process transactions, receive incentives to keep the operation running. These incentives are called block rewards. Specifically, by mining a single BTC token, the miner adds one block to the blockchain. The incentive for this single block is 6.25 Bitcoin tokens. Based on current rates ($29,210), this is approximately $182,562.

Post-halving, miners will receive 3.125 Bitcoin tokens (half of 6.25) for every successful block added to the blockchain. This translates to about $91,281. The drop in mining rewards is part of the reasons why miners are fretting over the oncoming event, as it means their revenue source will suffer a 50% slash.

Why BTC miners are disconcerted over Bitcoin halving

It makes sense for a trader or investor to assume that a 50% slash in mining rewards is a reasonable sacrifice considering the event in itself serves to increase the value of Bitcoin. This means that even the 3.125 block reward could account for more than the rewards when incentives added up to 6.25 BTC tokens.

However, from a miner or mining company's standpoint, it is a stark value loss, considering the operating expenses required to mine Bitcoin. The infrastructure required to mine Bitcoin has increased in price over time, with mining equipment costing more now, electricity rates going higher, and the fact that there are deliberations for a 30% mining tax to be imposed on miners in the US specifically. 

Notably, Bitcoin's hash power, the power that a computer or hardware uses to run and solve different hashing algorithms, is mostly concentrated in the US.

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