SUPERNEWS

Crypto

Bitcoin Halving to 450: Miners Face Revenue Hit, Market Shrugs

Bitcoin's fourth 'halving' slashes mining rewards to 450 daily, potentially impacting miners' revenue and market dynamics.

By Athena Xu

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4/19, 20:24 EDT
Bitcoin / U.S. dollar
Marathon Digital Holdings, Inc.
Riot Blockchain, Inc
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Key Takeaway

  • Bitcoin's "halving" event reduced miner rewards to 450 from 900, potentially impacting mining companies' revenues.
  • Despite past rallies post-halving, analysts believe the recent event was already priced into the market.
  • JPMorgan predicts consolidation in the mining sector, with publicly-traded firms likely gaining due to better access to funding.

The Halving Event Unfolds

The crypto world watched closely as the Bitcoin network underwent its highly anticipated "halving" event, a significant moment that reduces the mining reward by half. This event, which occurred at 8:10 p.m. Friday evening New York time, as reported by mempool.space and Blockchain.com, marks the fourth occurrence since Bitcoin's inception. Designed by Bitcoin's anonymous creator, Satoshi Nakamoto, the halving aims to prevent inflation by maintaining a hard cap of 21 million Bitcoin. As a result, the reward for miners validating transactions on the blockchain has now decreased from 900 to 450 Bitcoin daily.

Market Implications

Despite the reduction in mining rewards, Bitcoin advocates, including MicroStrategy Inc. Chairman Michael Saylor, view the halving as a bullish catalyst for the cryptocurrency. They argue that reducing the supply of new tokens, especially amid rising demand from new exchange-traded funds (ETFs) that hold the digital asset, could bolster Bitcoin's value. However, analysts from JPMorgan Chase & Co. and Deutsche Bank AG have suggested that the market has already priced in the halving event. The dilutive effect of mining is also diminishing with each halving; the upcoming cycle's new supply will only constitute 3.3% of the total Bitcoin outstanding, a significant decrease from the 50% following the first halving.

Impact on Mining Companies

The halving's most direct impact is expected on Bitcoin mining companies, potentially erasing billions in annual revenue. Yet, if Bitcoin's price continues to ascend, the blow may be softened. Mining, known for its high energy consumption, involves validating transactions on the blockchain. Firms like Marathon Digital Holdings Inc. and Riot Platforms Inc. have invested heavily in this area. JPMorgan analysts predict a consolidation in the sector, with publicly-traded firms likely to gain market share due to their better access to funding and ability to invest in efficient equipment.

Street Views

  • JPMorgan Analysts (Neutral on Bitcoin mining companies):

    "Publicly-listed Bitcoin miners are well positioned to take advantage of the new environment, mainly due to greater access to funding and in particular equity financing. This helps them to scale their operations and invest into more efficient equipment."