The Bitcoin halving event has been filling the headlines since late 2023 itself. The highly anticipated phenomenon finally took place on Saturday, April 20. With this, the block reward for Bitcoin miners will be reduced from $6.25 to $3.125 per block.
Bitcoin halving happens once almost every four years and it plays a key role in the cryptocurrency’s monetary policy, which is deflationary. However, this begs whether Bitcoin mining will be profitable after the 2024 halving.
Let’s find out in this article.
Bitcoin Transaction Fees
To make things clear, the block reward, which is now $3.125, is only part of what the miners get for verifying Bitcoin transactions. Along with the block reward, miners are also paid transaction fees, which are variable based on the supply of demand of mining.
Mining activity is on the rise, with many miners ramping up their infrastructure in hopes that the halving event will boost the demand for Bitcoin.
Bitcoin Halving Was No Surprise
Bitcoin’s halving is hard-coded into its protocol and it happens almost every four years and is hence predictable. Cryptocurrency miners have been preparing for years, to upgrade their infrastructure to more efficient computers.
Bitdeer Technologies Group, a Singapore-headquartered mining firm, for instance, has invested in new data centers and increased research and development. The halving event has forced the miners to innovate and resulted in new technologies like 4nm mining rigs and AI Cloud offerings.
Efficient Machines Are The Future
Crypto commentators observe that in the upcoming days, mining data centers will work together with power generators and grid operators. This will serve as a virtual battery for grid operators helping them to regulate power output according to demand.
Core Scientific, a major U.S. mining firm claims that it has been trying to diversify its business venturing into other cryptocurrencies. Data centers are now moved to locations close to major cities, to reduce the latency.
Artificial Intelligence On Mining
Regarding the applicability of artificial intelligence (AI) in Bitcoin mining, the popular opinion is that given the current Bitcoin prices, the current block reward is already profitable for miners. After the halving, Bitcoin prices have moved past $66,000.
All else being equal, this will translate to the same block reward as US dollars, when the Bitcoin price is $33,000 and the block reward is $6.25.
Conclusion
With the introduction of Bitcoin ETF and developments in regulatory frameworks in the US and abroad, we expect to see larger players entering the crypto markets. This should drive up the prices of Bitcoin and other cryptocurrencies and result in a fourth crypto bull run. Speaking of other cryptocurrencies, the utility of Ether, Polygon, Solana, Avax, etc. are now widely accepted.
The applications of these cryptocurrencies and their native blockchains in payment services, Web3 infrastructure, are now at the forefront of widely adopted technologies. As a result, mining of Bitcoin and other crypto assets is expected to be profitable in the foreseeable future.
Read More: There Are Many Bitcoin Critics Left In Finance, Despite Blackrock’s Newfound Love
