Bitcoin Miners Face Potential $10 Billion Loss Ahead of Halving Event, Amidst Rising Competition from AI Companies.
Reports from U.Today indicate that Bitcoin miners may be on the verge of encountering losses surpassing $10 billion with the looming halving event, set to unfold in less than five days. The immediate fallout entails a reduction in mining rewards from 6.25 BTC to a mere 3.125 BTC per block. This impending halving is poised to inflict severe blows, particularly on mining entities burdened with higher-than-average operational expenses.
Traditionally, miners have weathered the storm of diminished block rewards, buoyed by subsequent bullish market surges post-halving. Historical data analyzed by Chainalysis reveals a pattern of miners bolstering their cash reserves leading up to the first two halvings in 2012 and 2016. However, this trend did not manifest preceding the third halving in 2020. Drawing from past mining cycles, miners opted to delay liquidating their reserves, foreseeing an uptick in Bitcoin’s valuation.
In the current landscape, although the aggregate balance of mining pools has dipped by over 20%, the contraction is notably less pronounced compared to preceding halvings. The recent attainment of a new all-time high in Bitcoin’s price on the cusp of the halving has somewhat alleviated concerns, enabling miners to cautiously offload certain holdings in preparation for the halving’s substantial impact.
Beyond the specter of the Bitcoin halving, miners find themselves grappling with escalating competition from artificial intelligence (AI) enterprises. Adam Sullivan, CEO of Core Scientific, underscores the tightening grip on power resources in the United States, characterizing it as “extraordinarily constrained.” Notably, tech behemoths such as Amazon are poised to inject hefty investments into data center infrastructure, intensifying the struggle for miners to secure lucrative, low-cost power contracts.
