Bitcoin mining profitability is expected to remain stable even after the upcoming Bitcoin halving event, according to Laurent Benayoun, the CEO of Acheron Trading. The halving, scheduled for April 20, will reduce block rewards from 6.25 BTC to 3.125 BTC. In previous halvings, smaller mining companies were unable to sustain their operations due to the reduced rewards. However, Benayoun believes that this time will be different due to the increasing network fees driven by Ordinals inscriptions and Bitcoin-native decentralized finance (DeFi), also known as BTCFi.
Network fees, which are transaction fees paid to miners to include transactions in the next block, have been rising steadily. Currently, the average Bitcoin transaction fee is $4.88, down from $16.13 a month ago but up by over 86% in the past year. Benayoun suggests that these fees, combined with the appreciation of Bitcoin’s price, will contribute to the profitability of mining companies, making it less likely for them to go out of business.
Joe Downie, CMO of NiceHash, also believes that as long as the Bitcoin price remains above $70,000, mining companies will generally remain profitable. However, Bitcoin’s price has recently fallen by 4.3% to trade at $66,851, and it has been trading below the $70,000 mark since April 1.
In addition to Bitcoin’s price, the profitability of mining firms will depend on the quality and energy efficiency of their mining equipment. Downie emphasizes that these factors play a crucial role in determining a mining firm’s success.
Overall, due to the combination of Bitcoin’s price appreciation and increasing network fees, it is expected that fewer mining firms will be forced to shut down compared to previous cycles, providing a more stable environment for the industry.