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How Bitcoin miners can survive a hostile market — and the 2024 halving

Only seven months remain before the next Bitcoin (BTC) halving in April 2024. It happens approximately every four years and is a deflationary process that cuts the production of new coins by 50%.

Bitcoin’s halving is a high-profile event for crypto investors, and has historically led to an increase in Bitcoin’s price. However, its impact on the mining industry is a more complex issue. It reduces block rewards, one of the primary revenue streams for miners. The 2024 halving will reduce it from 6.25 BTC to 3.125 BTC. That’s why miners must adapt their strategies to compensate for the reduced rewards resulting from the halving.

Strategies for Bitcoin miners

  • Changing mindsets: Miners must focus on energy efficiency and cost-effective hardware to stay competitive.
  • Cost of electricity: Miners should secure electricity rates at or below 5 cents/kWh to maintain profitability.
  • Efficiency of equipment: Miners with more energy-efficient hardware will be the most profitable.
  • Accumulating excess capital: Miners can build reserves during profitable periods to offset the impact of reduced block rewards.
  • Exploring alternative revenue streams: Projects like Bitcoin Ordinals could provide additional income opportunities for miners.

Bitcoin Ordinals have recently garnered significant attention by driving transaction fees within the Bitcoin network to new highs. These ordinal “inscriptions” are unique assets created directly on the Bitcoin blockchain, similar to nonfungible tokens (NFTs). Miners can benefit from the revenue generated by these inscriptions, which suggests that alternative income streams may gain prominence in the long term.

As we move closer to the halving event, miners must prioritize strategies that optimize profitability and stay open to new alternatives. Adapting to the post-halving landscape will be crucial for their survival in a potentially hostile market.

Disclaimer: This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

About the author: Didar Bekbauov is the CEO of Bitcoin mining company Xive, which he co-founded in 2019. He previously served as a managing partner at Hive Mining. He holds an undergraduate degree from Kzak-British Technical University and a master’s degree in financial management from the United Kingdom’s Robert Gordon University. He also acts as a mentor at the Founder Institute startup accelerator program in Houston, Texas.

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