Nov 14 (Reuters) – Bitcoin miners are taking advantage of the current cryptocurrency rally to boost their profits before the upcoming “halving” event. The halving, which is expected to occur in April 2024, will cut the rewards for mining bitcoin in half. This process is designed to slow down the release of bitcoin, as its supply is limited to 21 million, with 19 million already mined. Analysts have noted a sense of urgency among miners to increase their mining capacity before the halving takes place. The hashrate, which measures the computational power required to mine bitcoin, has reached an all-time high, indicating that miners are using more power and speed to solve complex mathematical puzzles. J.P. Morgan analysts estimate that the hashrate has reached record levels for 11 consecutive months, including a significant surge in October.
Bitcoin’s recent price increase, rising by about 37% in the past month to around $37,000, has motivated miners to connect their powerful computers to mine and sell newly minted coins. The average revenue earned by miners over a 30-day period has steadily improved this year, reaching an 18-month high of $32.46 million on Nov. 11, according to data from blockchain.com. However, mining remains less profitable compared to its peak in 2021. The earnings from using 1 petahash per second of computing power in a day have increased to over $81 from $70 at the beginning of November but are still below the peak of $127 in early May, as reported by mining data platform Hashrate Index.
With six months remaining until the halving event, miners are seeking ways to maintain their profit margins in the highly competitive mining industry. Some mining companies are upgrading their equipment and increasing their hashrate power to stay competitive. Others are relocating their operations to Central American countries with more affordable energy prices in order to preserve their profit margins.
Historically, bitcoin prices have rallied following previous halvings. After the first halving in 2012, the price jumped from $12 to $126 within six months. Similarly, after the second halving in 2016, the price increased from $654 to $1,000 within seven months. In 2020, the price surged from $8,570 to $18,040 in the same time period. The upcoming halving in April 2024 will reduce miner rewards to 3.125 bitcoin per block. At current prices, mining each block yields $231,250.
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