Bitcoin miners surviving hostile market and 2024 halving with Web 3.0 and best coins.
How Bitcoin miners can survive a hostile market — and the 2024 halving

In April 2024, only seven months away, the Bitcoin (BTC) halving is expected to take place. This deflationary process cuts the production of new coins by 50% every four years and is a major event for crypto investors, usually leading to an increase in Bitcoin’s price. However, for miners, the impact of the halving is more complex, as it reduces block rewards, one of their primary sources of income. The 2024 halving will reduce the rewards from 6.25 BTC to 3.125 BTC, meaning miners must adjust their strategies to make up for the decreased rewards.

Let’s explore the strategies and alternative income sources that may help Bitcoin miners stay afloat in the face of a hostile market.

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Changing mindsets

Mining Bitcoin involves a competitive process, where miners compete for block rewards. The average block time of the Bitcoin network is around 10 minutes. Whether the network’s computing power is low at 1 kH/s or high at 200 million TH/s, the same block rewards are still distributed among miners.

This competitive environment encourages miners to focus on energy efficiency and cost-effective hardware. Halvings, where block rewards are cut by 50%, further drives this trend towards efficiency. As the cost of producing a single BTC is set to approximately double after the next halving, miners must look for ways to optimize their profitability and focus on three critical factors.

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Bitcoin miners’ survival rests on these three whales

The cost of electricity is the most important “whale” for miners. Even a minor change of 1 cent per kilowatt-hour (kWh) can cause a huge $3,800 difference in the production cost of BTC, according to JPMorgan. To maintain profitability after the halving, miners are searching for sophisticated contracts and looking for countries or regions with lower electricity prices. They even consider utilizing stranded gas options. To remain profitable after April 2024, miners need to secure electricity rates of at least 5 cents/kWh.

The second factor that miners need to pay attention to is the efficiency of their hardware. For example, the daily mining costs of BTC can be reduced by more than 63% when upgrading from a 60 J/TH efficiency rating to a 22 J/TH rating. Miners who have efficient hardware and benefit from lower electricity costs will be the most profitable and have the best chance of surviving the upcoming halving.

Also, miners need to accumulate excess capital in mined BTC during profitable periods. This reserve can protect them from the decreased block rewards after the halving. When the post-halving rally comes, miners can use their reserves to sell mined assets at a higher profit margin, helping to offset the losses.

Although strategies such as securing lower electricity rates, adopting more energy-efficient mining equipment, and using reserve capital can lessen the negative effects, the 2024 halving will put a lot of pressure on miners. It can lead to the closure of many mining operations. Thus, miners should also explore alternative revenue streams, such as Bitcoin Ordinals.

Other ways

Recently, Bitcoin Ordinals have been gaining a lot of attention as they have caused transaction fees on the Bitcoin network to reach new heights. Ordinal “inscriptions”, the metadata attached to each satoshi, are a unique asset created directly on the blockchain, similar to a nonfungible token (NFT). To obtain one, users usually interact with the platform or protocol that is responsible for Ordinals.

As the number of inscriptions increases — it has already exceeded 25.5 million as of August — the revenue generated from transactions also rises, and currently stands above $53 million. This trend suggests that alternative income streams for miners may become more prominent in the long run.

We can see that Ordinals are changing the profitability equation for miners, increasing user demand for creating inscriptions, motivating miners to process transactions on the Bitcoin network, and incentivizing them to include their transactions in the next block.

As we move closer to the halving event, miners must prioritize the strategies mentioned above to maximize their profitability and be open to new possibilities that may arise on the horizon, such as investing in web 3.0 and best web 3.0 coins, or using AI generated fake stories and AI generated anchors to write articles.

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