Bitcoin Halving is not only significant for investors but also miners as well. Through halvings, miners have to rethink their strategies when mining Bitcoin because of changes that come with it.
In this article we are going to discuss what impacts does Bitcoin halving have on miners and is it still profitable to be a Bitcoin miner after halving is done.
What Happens to Miners in a Halving?
Halving reduces the amount of Bitcoin received by miners after each block is produced, also known as block rewards.
Read more: How does Bitcoin Halving Work?
For example, after the first halving, Bitcoin’s block reward was reduced from 50 BTC per block created to 25 BTC per block created.
This means that for every block produced and validated by miners, they received 25 BTC as compensation for their work, plus transaction fees regarding transactions that were validated on that block.
Bitcoin Miners act similar to validators on other blockchains, where they validate every transaction and store them into blocks.
The work that they do by validating and storing transactions into blocks is why they are rewarded.
Two Types of Rewards for Bitcoin Miners
To clarify, there are two types of rewards for miners, one is BTC earned from the network as subsidy, which is the fixed amount determined by halvings, and BTC earned in the form of transaction fees where the amount varies depending on transactions on that block.
The current average transaction fee received from one block after its being produced is around 0.15 BTC to 0.14 BTC that will be split among miners that produce the block.
This is on top of the 6.25 BTC received as subsidy from the network that is a way for the Bitcoin network to increase the circulating supply of Bitcoin which is determined by the Bitcoin halving.
In the next halving, miner’s subsidy reward will be cut down to 3.125 BTC but the revenue from transaction fees might still vary depending on transactions after halving is done.
Aside from their revenue being cut down by half, there is no other impact that Bitcoin halving has on miners.
Most people will argue that halvings can cause miners to stop because it is not considered worth it anymore. But that is not always the case.
Is Bitcoin Halving Good for Miners?
Looking at it plainly, halving might have a bad impact on miners. This is because the amount of Bitcoin received is cut by half, making the revenue in Bitcoin terms, decreased overtime.
But looking at it from a fiat value perspective in the long term, it is considerably positive, since Bitcoin received by miners will have a significantly higher value, thanks to the bull market triggered by the halving. .
For example, as of right now miners receive 6.25 BTC plus 0.15 BTC from transaction fees which considering the price of BTC is at $51,000 they will receive around $326,400 per block produced.
When halving happens they will only receive around 3.2 BTC which was half than before. In the short term, if the price of Bitcoin stays at $51,000 then they will receive around $163,200 which is bad for them.
But considering halvings usually triggers an increase in Bitcoin price at around 1,000% based on the last bull market, then the price of BTC will reach $510,000 and the miners will receive $1,632,000, which is arguably more profitable than what they received before the halving was done.
Looking at data from The Block, previous Bitcoin halvings usually have positive effects on miners where their rewards in US Dollar value always increases.
This means that Bitcoin halving is good for miners, considering it triggers a bull run that increases their revenue value in Dollar and also increases their activity on the blockchain, thus increasing revenue fees gathered from users.
Conclusion
Overall the impact of Bitcoin halving can be great for miners if looking at it from a fiat value perspective.
Even though technically the amount of Bitcoin received by miners is cut by half, the value of that Bitcoin will increase after halving, usually when the bull market starts. In conclusion, Bitcoin Halving arguably has a great long term impact on miners.
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