Bitcoin completed its fourth halving on April 20, reducing the block reward to 3.125 BTC. The halving initially affects mining, with miners’ income decreasing in the short term. Additionally, the halving also affects Bitcoin’s inflation rate, with increased scarcity expectations driving the price further. However, since the halving, Bitcoin has remained in a high-level consolidation phase, experiencing a slight decrease in price by 3.87%. This puts pressure on miners and causes short-term investors to face losses.
Essentially, each halving is another dynamic balance of market supply and demand. In this process of rebalancing, it is worth noting the trends in market funds. What specific pressures does the mining industry face? What is the current demand side of Bitcoin? Based on an analysis of current market data, mining data, and other demand-side data by PAData, a data column under PANews, the following observations can be made:
Since March, the proportion of loss-making Bitcoin chips has risen from 1.28% to 15.18%. The average SOPR index for short-term investors after the halving is 0.99972, indicating that many short-term investors have incurred losses due to expectations of the halving.
After the halving, the circulation rate of on-chain tokens dropped by 23%, indicating that more chips are being accumulated. Looking at the time period, there has been a significant increase in the number of chips held for 1-3 months, 3-6 months, and 3-5 years since the beginning of this year. In terms of different balance-held addresses, there has been a significant increase in the number of addresses with balances between 100 BTC and 1000 BTC, as well as between 1000 BTC and 10000 BTC, with increases of over 1.3%.
Miners are facing significant revenue pressures after the halving. Based on the current coin price and high electricity costs, the shutdown price is estimated to be $55,000, a significant increase from the lowest shutdown price of $14,300 in August last year.
The current daily mining revenue is approximately $26.4871 million, a decrease of 51.63% compared to the daily average revenue of $54.7623 million before the halving. The current daily transaction fees are approximately $2.28 million, a decrease of 34% compared to the daily average fees before the halving.
Assuming that transaction fee income remains unchanged, meaning the current average fee per transaction and number of transactions are maintained, achieving the pre-halving daily average revenue level would require a coin price of $94,489.82, an increase of 51.63% compared to the current price.
Assuming the coin price remains unchanged, achieving the pre-halving daily average revenue level would require the number of transactions to increase to 1.6737 million, an increase of 202.49% compared to the post-halving daily average, or an average fee per transaction of 0.00080317 BTC, an increase of 206.08% compared to the post-halving daily average.
The initial strong demand for Runes brought significant profits to miners, with 881 BTC in transaction fees contributed on the first day of its launch.
It is widely believed that the price of Bitcoin will rise significantly after the halving. Historical data shows that the price of Bitcoin increased by 8069.11%, 256.85%, and 478.10% within one year (365 days) after the past three halvings.
However, in the short term, the impact of the halving on the price of Bitcoin is slow. In the 17 days following the past three halvings, the price of Bitcoin increased by 9.73%, 0.97%, and 6.98%. But since the halving, Bitcoin has remained in a high-level consolidation phase, currently around $62,400, with a decrease of approximately 3.87%.
The proportion of loss-making chips in the market has increased due to the lower-than-expected price of Bitcoin. Since the halving, Bitcoin has been fluctuating between $64,900 and $62,400, while the proportion of loss-making chips has increased from 10.95% to 15.18%. In fact, the increase in the proportion of loss-making chips started before the halving. Since March, Bitcoin has been consolidating above $62,500, while the proportion of loss-making chips has been continuously increasing from 1.28%. This suggests that many short-term investors have incurred losses due to expectations of the halving.
The SOPR index for short-term investors also indirectly confirms this possibility. A value less than 1 indicates that investors who hold Bitcoin for more than 1 hour but less than 155 days are overall at a loss. According to data from CryptoQuant, the current SOPR index is 1.0022, very close to 1, and the average SOPR index after the halving is 0.99972, indicating that short-term investors are overall at a loss in the near future.
Alongside the low price, the circulation rate of chips on the chain has also significantly slowed down. According to data from Glassnode, the current circulation rate (7-day moving average) is 0.01044, a decrease of nearly 23% compared to the halving day, and a decrease of nearly 33% compared to the beginning of the year.
The rapid decline in circulation rate may indicate that more chips are being accumulated. Looking at the time period, there has been a significant increase in the number of chips held for 1-3 months, 3-6 months, and 3-5 years since the beginning of this year. In particular, the proportion of chips held for 1-3 months has increased by 7.14 percentage points this year, and by 2.44 percentage points after the halving, indicating a trend of accumulation from the short term to the medium term.
From the perspective of addresses with different balance amounts, there has been a significant increase in the number of addresses with balances between 100 BTC and 1000 BTC, as well as between 1000 BTC and 10000 BTC, increasing by 1.35% and 1.39% respectively this year. This phenomenon still exists after the halving. Among all addresses, the number of addresses with balances between 1000 BTC and 10000 BTC has increased by 1.07%. These data indicate an increase in the number of large holders and the accumulation of chips.
After the halving, the network’s hash rate has decreased by over 7%. According to data from Glassnode, the current hash rate is 582.2 EH/s, a decrease of 7.43% compared to the halving day. The decrease in hash rate exceeds the decrease in coin price, indicating that miners have shut down some mining machines to maintain profitability.
Based on data from f2pool, miners are facing significant revenue pressures. Calculating based on the coin price of $62,315.29 on the day of data collection, if the mining machines are located in areas with lower electricity costs and assuming a charge of $0.07 per kWh, there are still 31 types of mining machines that can remain profitable with shutdown prices lower than the current coin price. Among them, Antminer S21 Pro has the lowest shutdown price of $32,200 and a daily net income of $5.52. According to data from BTC.com, the lowest shutdown price was $14,300 in August last year.
If the mining machines are located in areas with higher electricity costs and assuming a charge of $0.12 per kWh, only three types of mining machines can remain profitable, namely Antminer S21 Pro, Antminer S21 Hyd, and Antminer S21, with shutdown prices above $55,200.
The electricity cost becomes a crucial factor in determining the life or death of miners if the market situation does not improve. If the market improves, the extent of improvement and the alleviation of miner pressure depend on the electricity cost.
Assuming the electricity cost remains low, when the coin price rises to $80,000, there will be 45 types of mining machines that can remain profitable, with Antminer S21 Pro still having the lowest shutdown price and Shenma M63S (390T) having the highest daily net income of $12.30. When the coin price rises to $100,000, there will be 66 types of mining machines that can remain profitable, with Antminer S21 Pro still having the lowest shutdown price and Shenma M63S (390T) having the highest daily net income of $18.41. As the coin price rises, miners have a wider range of mining machine options and can diversify their configurations.
Mining revenue has plummeted after the halving. According to data from CryptoQuant, the current daily mining revenue is approximately $26.4871 million, a decrease of 51.63% compared to the daily average revenue of $54.7623 million before the halving. However, it is worth noting that on the day of the halving, the launch of the Runes protocol brought in approximately $107 million in mining revenue, an increase of 95.06% compared to the daily average revenue before the halving.
The strong increase in on-chain demand can compensate for the loss of mining revenue after the halving through transaction fees. On the day of the Runes launch, transaction fees reached $80.58 million, accounting for 75% of the total revenue. However, as the popularity of Runes cools down and transaction volume decreases, the current daily transaction fees are approximately $2.28 million, a decrease of 34% compared to the daily average fees before the halving.
Mining revenue (in USD) = (block reward + transaction fees) * coin price. Therefore, the decrease in mining revenue after the halving can be compensated in two ways: assuming transaction fee income remains unchanged, a significant increase in coin price is required; assuming the coin price remains stable, a significant and continuous increase in transaction fee income is required. Of course, this is a static and simplified analysis aimed at demonstrating the potential impact of the halving on the price and transactions of Bitcoin.
According to data from CryptoQuant, the daily average mining revenue before the halving was $54.76 million, and after the halving, the average daily block count is 139, resulting in an average block reward of 434.23 BTC, an average fee per transaction of 0.0002624 BTC, and an average daily transaction count of 553,328.19.
Assuming transaction fee income remains unchanged, meaning the current average fee per transaction and number of transactions are maintained, reaching the pre-halving daily average revenue level would require a coin price of $94,489.82, an increase of 51.63% compared to the current price.
Assuming the coin price remains unchanged and the transaction fee remains unchanged, reaching the pre-halving daily average revenue level would require the number of transactions to increase to 1.6737 million, an increase of 202.49% compared to the post-halving daily average, or an average fee per transaction of 0.00080317 BTC, an increase of 206.08% compared to the post-halving daily average.
Bitcoin’s demand side remains weak, as indicated by various TVL and Runes data. The impact of the halving on the mining industry is significant, as unprofitable miners pose a threat to the underlying security of the blockchain. In addition to the coin price, transaction fees and transaction volume directly reflect demand. So, what is the current demand situation for Bitcoin?
Looking at Runes, according to data from Dune Analytics by @cryptokoryo, the number of related transactions has decreased from an initial 463,600 to the current 79,400, and the transaction fees have decreased from 881 BTC to 4 BTC. From the daily mining revenue, it can be seen that the initial strong demand for Runes brought significant profits to miners. The current challenge is how to maintain the sustainability of demand for various Bitcoin projects like Runes.
In addition, the DeFi imagination brought by Bitcoin’s Layer 2 and Runes may stimulate more usage demand. Currently, according to statistics from DefiLIama, Bitcoin’s current TVL on-chain has reached $1.208 billion, a 296% increase since the beginning of this year, and it has remained relatively stable after the halving. Among them, apart from the Lightning Network, the recently launched AINN Layer 2 has also performed well, with a current TVL of $590 million, becoming a major application in the Bitcoin ecosystem. Additionally, applications such as BiFi, Maya Protocol, and BoringDAO have also experienced rapid growth in TVL this year.
