The mining reward for Bitcoin, which is known as a representative crypto asset (cryptocurrency, virtual currency), will soon be halved. This event, known as a “halving,” occurs about once every four years and can be fatal for miners competing for newly created bitcoins.
“You don’t see this in other industries,” said Charles Chong, director of strategy at Foundry, a Bitcoin mining and miner services company. “It’s like being on a treadmill. If you don’t keep going, you’ll be left behind.” The only “mercy”, he says, “is that we have a lot of time to prepare.”
In past halvings, mining operators who could no longer cover their mining costs abandoned their machines.I stopped it.Smaller operators and individual miners are moving away from mining.Completely withdraware doing.
When unprofitable mining equipment disappears from the network, Bitcoin’s system undergoes a total rebalance, reducing the amount of computing power (and therefore mining costs) required to acquire new coins. Eventually, when equilibrium is restored, mining companies that can absorb the initial blow will become profitable again.
However, things are different this time.
In March of this year, the price of Bitcoin exceeded $70,000 (approximately 11 million yen) per coin.rose to an all-time highTherefore, the risk for mining operators is decreasing. Although mining revenue would be cut in half in this case, multiple mining operators claim that the associated revenue would exceed the cost of operating the hardware.
“If the price of Bitcoin hadn’t skyrocketed, the environment after the halving would have been very different,” says Asher Genuto, CEO of mining company Hut 8. “Right now, high prices are ‘saving’ many people.”
Mining operators forced to take action
Since the price of Bitcoin rose during past halvings, we will also discuss the price rise this time.speculation is widespread. But the system’s economic design itself does not guarantee that these patterns will repeat.
The problem for miners would be if the price of Bitcoin were to swing in the opposite direction. Bitcoin’s price is subject to large fluctuations because it defies traditional valuation methods. For this reason, mining operators must be careful not to be caught by surprise.
In 2021, when the price of Bitcoin soared to a record high, many mining operators made terrible mistakes.To raise funds to expand mining scalehave a large amount of debtthey used mining equipment as collateral.
The following year, when the price of Bitcoin slumped and mining costs rose, operatorschased by debt repayments、equipmentauction for cheapto deliver the hardware to the lender.forced.Some operatorsdriven into bankruptcyThat’s about it.
Mining operators are using a variety of strategies to protect themselves from this situation. According to Hut 8’s Genuto, Hut 8 holds a large amount of the mined Bitcoin without converting it into dollars, betting that the price will rise further.
Genuto says the funding is not a “crutch” to compensate for the company’s slide into unprofitability. Rather, it is a reserve fund that can be used to buy hardware and equipment cheaply from struggling competitors.
Hut 8, which previously specialized in Bitcoin mining, merged with US Bitcoin Corporation in 2023 and leased space in its facilities to other mining operators. Hut 8 is also investing in hardware for cloud computing and artificial intelligence (AI) training. This diversification of revenue sources has helped the company cope with declining mining profitability, Genuto says.