After the Bitcoin halving, roughly a third of Bitcoin mining companies are expected to close down their business, as the industry turns out unprofitable. The recent halving event slashed Bitcoin miners’ reward by 50 percent.
6.25 BTC reward epoch
Instead of the previous 12.5 BTC reward, miners will now earn as low as 6.25 BTC. The reduction in Bitcoin mining reward is already affecting miners. It could eventually force many of them out of business, especially the small-size operators, according to VP at Poolin, Alejandro De La Torre.
De La Torre stated that Bitcoin miners that constitute about 15 percent to 30 percent of the crypto’s network hashrate are in the process of closing down their business due to the slashed reward. This relates to the high cost of running such a business, as the machines consume high electricity.
Less efficient Bitcoin miners might be squeezed
In De La Torre’s opinion, mining companies operating with old generation rigs, like the Bitmain’s S9 miner, are likely to face more of the hit, particularly those operating in regions with high electricity consumption rate.
“The … final difficulty adjustment with the 12.5 BTC block subsidy will occur one week before the halving (1008 blocks), and the difficulty is projected to increase.”
The VP at Poolin said, adding this difficulty will squeeze 30 percent of the total Bitcoin network.
Bitcoin uptick can remunerate miners
Many industry experts believe that reduction in Bitcoin mining rewards can still be compensated by a surge in Bitcoin price, as seen with the previous halving. If price declines, less efficient Bitcoin miners would be deeply affected and forced out of the market.
As per De La Torre, the mining industry is all about survival, and companies that failed to upgrade to more efficient mining equipment or cheap energy cost, are going to “capitulate.” While many Bitcoin miners are expected to close shops, some can still stay in business as they operate with cheap and enough energy.