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.
Let’s explore the strategies and alternative income sources that may help Bitcoin miners amid hostile market conditions.Bitcoin mining involves a competitive process where miners vie for block rewards. This competition is driven by Bitcoin's block time, which averages around 10 minutes per block on the protocol level. Whether the network's computing power is relatively low at 1 kH/s or surges to a massive 200 million TH/s, the same block rewards must be distributed among miners.
The second major factor demanding miners' attention is the efficiency of their equipment. For instance, daily BTC mining costs can beby more than 63% when upgrading from a rig with a 60 J/TH efficiency rating to one with a 22 J/TH rating. Miners boasting hardware efficiency and benefiting from lower electricity costs will be the most profitable. They are the ones most likely to weather significant market events like the upcoming halving.
Additionally, I suggest miners employ the third strategy that involves accumulating excess capital in mined BTC during profitable periods. This reserve can serve as a buffer against the impact of reduced block rewards post-halving. When the post-halving rally occurs, miners can capitalize on their reserves by selling mined assets at a higher profit margin, helping to offset the losses.
While strategies such as securing lower electricity rates, adopting more energy-efficient mining equipment, and utilizing reserve capital can mitigate the adverse effects, the 2024 halving will bring substantial pressure on miners. It can lead to the potential closure of numerous mining operations. Thus, miners will also need to explore alternative revenue streams. One promising opportunity for miners lies in projects like Bitcoin Ordinals.