Less Than 15,000 Blocks to Halving: ETF Hopes and Ordinal Inscriptions Serve as Life Preserver for Bitcoin Miners
As of Jan. 9, 2024, fewer than 15,000 blocks remain before the fourth Bitcoin halving event. This milestone will halve the block reward from 6.25 to 3.125 bitcoins per block. Expected to occur in April 2024, this event will render bitcoin increasingly scarce. However, it may exert considerable pressure on miners, seeing their earnings cut by 50% following the halving.
2 Key Trends Buoy Miners Ahead of 2024 Milestone
The Bitcoin halving event is approaching and is estimated to be just over 100 days away, assuming block times maintain their average of ten minutes. Current statistics, as of this writing, indicate that 14,981 blocks remain until the halving.
This upcoming event marks the fourth halving; the first occurred on Nov. 28, 2012, followed by the second on July 9, 2016, and the third on May 11, 2020. Before these halving epochs, especially preceding the 2016 and 2020 events, certain skeptics of bitcoin predicted a ‘mining death spiral’ accompanied by substantial miner capitulation.
In the past, bitcoin detractors have claimed that a mining death spiral could occur post-halving due to reduced block rewards. They argue that this decrease in profitability may lead to miners exiting the network en masse, resulting in a drop in hashing power, slower transaction times, and potential security vulnerabilities, thus destabilizing the entire Bitcoin network.
However, a 2020 research study by Coinshares dismissed these concerns as “highly theoretical edge cases without any historical real-world precedent.” As the 2024 halving nears, these once-prominent theoretical concerns have significantly diminished.
Up to this point, two key developments have enhanced the earnings of bitcoin miners: the anticipation of a U.S. spot bitcoin exchange-traded fund (ETF) approval and the burgeoning Ordinal inscription trend. Mining revenue saw a substantial rise throughout 2023 and this trend has persisted into the new year.
The positive sentiment surrounding the potential approval of a spot bitcoin ETF has boosted BTC’s value, consequently increasing the network’s hash price. The surge in activity, coupled with the popularity of Ordinal inscription minting, has significantly raised transaction fees. If these trends persist, miners might not experience a significant impact from these changes.
Although current fees are lower than last month, they remain notably higher than the same period last year. The potential approval of an ETF has led crypto enthusiasts to anticipate significant demand for bitcoin from these publicly traded funds, potentially maintaining BTC’s high price for an extended period.
As with previous halvings, the outcome remains uncertain, and bitcoin miners have historically operated under tight conditions. However, major mining operations with substantial capital are scaling up their hashrate significantly by acquiring thousands of advanced mining rigs.
With these more efficient miners and increased hashrate outputs, coupled with the potential price support from an ETF and higher fees due to inscriptions, bitcoin miners are expected to remain resilient, similar to their experience during the past three halving events.
What do you think about the upcoming Bitcoin halving event? Share your thoughts and opinions about this subject in the comments section below.