Bitcoin mining profitability won’t necessarily fall after the upcoming Bitcoin halving, despite a 50% Bitcoin (BTC) supply issuance reduction, Laurent Benayoun, the CEO of Acheron Trading, told Cointelegraph in an interview:
The Bitcoin halving is set to reduce block issuance rewards from 6.25 BTC to 3.125 BTC on April 19. Following previous halvings, smaller mining firms were forced out of business due to the decreased block rewards.
However, this will be different after the 2024 halving due to the increasing network fees boosted by Ordinals inscriptions and Bitcoin-native decentralized finance, or BTCFi, Benayoun told Cointelegraph:
Bitcoin network fees are transaction fees paid to incentivize miners to include a transaction in the following block.
Average Bitcoin transaction fees are currently at $4.88 per transaction, down from $16.13 per transaction a month ago, on March 5. Bitcoin transaction fees rose over 86% during the past year, according to YCharts.
Related: BTCFi innovation to match Ethereum DeFi in the future — MerlinSwap co-founder
Bitcoin mining companies would generally stay profitable if the Bitcoin price remained above the $70,000 mark, Joe Downie, the chief marketing officer of NiceHash, told Cointelegraph:
Bitcoin price fell 4.3% during the previous week to trade at $66,851 as of 10:22 am UTC. BTC has been trading below the $70,000 mark since April 1, according to CoinMarketCap data.
Beyond Bitcoin’s price action, a mining firm’s profitability will depend on its mining equipment’s quality and energy efficiency. Downie explained:
Bitcoin miner revenue recorded its second-best day in history on March 6, reaching $75.9 million a day after the Bitcoin price hit a new all-time high above $69,200.
Thanks to Bitcoin’s price appreciation, combined with the increasing network fees, fewer mining firms will be forced out of business compared to past cycles, says Acheron Trading’s Benayoun:
Related: Is the Bitcoin halving the right time to invest in BTC?