According to a recent article from Glassnode, Bitcoin miners are currently experiencing boosted profits due to the increase in Bitcoin ordinals. Ordinal inscriptions act as a source of revenue for miners by converting empty blockspace into income. However, the article warns that this upward trend may not last long. As the competition among miners intensifies and more mining rigs come online, the income stress on miners is expected to become severe. This problem is predicted to worsen after the next block subsidy halving in April 2024, when miner rewards per block will drop by 50%, leading to a doubling of the production cost per BTC. This would put the majority of the mining market into severe income stress, potentially causing significant challenges for miners.
Glassnode presents two models to estimate the impact of the halving on miners. The first model compares the issuance to mining difficulty, estimating that the most efficient miners on the network will have an acquisition price of around $15.1k. However, after the halving, this level is expected to double to $30.2k, putting the majority of the mining market under severe income stress. Another model calculated the average miner acquisition price at $24,300 per Bitcoin, which is approximately 8% below the current spot price.
Despite the challenges faced by miners, some analysts, such as Filbfilb, remain optimistic about the build-up to the halving. They believe that miners will increase their BTC accumulation in advance of the event to ensure that prices remain above their marginal cost. This accumulation, along with smart money “buying the rumor” over the halving, is expected to support BTC supply dynamics. However, readers should conduct their own research and exercise caution, as this article does not provide investment advice or recommendations.