Bitcoin Halving Cuts BTC Mining Rewards, Miners Stare at Plunging Inflows
Bitcoin Halving Cuts BTC Mining Rewards, Miners Stare at Plunging Inflows
The latest Bitcoin halving event, which occurred on April 20, has effectively cut the rewards for BTC miners in half.
Before the halving, miners received 6.25 BTC for every block they mined and added to the blockchain. After the software change, that block reward could decrease to 3.125 BTC.
Accordingly, this reduction in mining rewards represents a hit to revenue streams of Bitcoin mining operations, as stated by Bloomberg’s report. Collectively, miners' annual rewards are set to plummet from over $6 billion to $3 billion per year.
As mentioned in our article at Traders Union, experts believed that the halving could control Bitcoin's supply and inflation, similar to past halvings in 2012 and 2016 which preceded price rallies. The token’s finite supply of 21 million coins stands as a value proposition over fiat currencies which can be inflated.
Meanwhile, others are skeptical the halving will provide a boost. JPMorgan analysts stated the event was likely already "priced in" by the market based on Bitcoin's 2023 performance.
On halving day, Bitcoin's price was unmoved, trading around $63,893 according to CoinGecko’s data. In addition, average transaction fees spiked over 700% to $250 before normalizing.
Still, the 2024 halving puts pressure on mining profitability. Subsequently, less efficient miners may be forced out, while larger players consolidate more hash rate. At the same time, transaction fees, a small portion of miner revenue, may become a crucial point.
Consequently, bullish sentiment toward Bitcoin may be pulled down by macroeconomic influences, such as signals from the Federal Reserve and conflict in the Middle East.
When that happens, BTC miners will have to rely on transaction fees, their other revenue source besides mining rewards.
Furthermore, rising transaction fees may help miners stay afloat as the rewards continue to decline.
