BTC Halving Forces Crypto Miners to Be Proactive to Maintain Competitive Position: Fidelity Digital Assets

Bitcoin (BTC) holders have welcomed the quadrennial reward halving in the past in anticipation of it driving up prices, but miners must constantly prepare for this event – which will see their earned Bitcoins increase by 50% reduced – to avoid bankruptcy, Fidelity Digital Assets said in a report Monday.

“Not only do miners have to maintain their existing hash rate, energy and real estate, but they are also constantly in competition with the entire network trying to do the same,” wrote analyst Daniel Gray.

Hashrate refers to the total combined computing power used to mine and process transactions on a proof-of-work blockchain like Bitcoin. Miners need to be proactive and cannot afford to just maintain their position on the network, the report said.

“They must continually push to acquire more hashrate and increase the efficiency of their hashrate, obtain lower-cost energy from cheaper sources, and expand their infrastructure to accommodate new machines,” Gray wrote. At the same time, every other miner is also bidding for the same resources.

Fidelity notes that the months following the halving are the most difficult because while Bitcoin is “making up for the immediate pay cut,” miners need capital reserves to offset the decline in revenue.

Still, as the protocol evolves, new layers could emerge, bringing with them new use cases and more users, the statement said.

“While previous halvings pushed out weaker miners, the industry ultimately bounced back with more miners and hashrates than ever before, demonstrating the resilience of the network and industry,” the report added.

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