A new report from JPMorgan predicts a possible reduction of at least 20% in the Bitcoin hashrate following the arrival of the halving in 2024.
JPMorgan has published a report predicting a possible 20% reduction in Bitcoin's hash rate following the halving event scheduled for April 2024. The report suggests that up to 80 EH/s could be removed, which is equivalent to 20% of the current network hash rate, as older mining hardware is phased out following the next halving in April 2024.
Before the event, S Matthew Schultz, CEO and co-founder of CleanSpark He commented on his account in X, the following:
Not all miners were created equal. Miners vary in scale, operational efficiency, access to capital and growth prospects. We believe CLSK, our top pick, offers the best balance of scale, growth potential, energy costs and relative value. MARA is the largest operator but has the highest… pic.twitter.com/Jj3CseRI6M
Impact on rewards
Let us remember that the halving is an important event in the cryptocurrency industry that has significant implications for miners and the market in general. The halving that will take place in April 2024 is expected to not only result in a 20% decrease in the hash rate, but overall have a significant economic impact on the cryptocurrency market.
Miners and investors in the Bitcoin ecosystem may need to consider hedging options to protect their income stability. Additionally, miners may need to upgrade their hardware to stay competitive in the market. The Bitcoin halving may also affect the price of Bitcoin, as the supply of Bitcoin in circulation will be drastically reduced, which could lead to an increase in its value.
In terms of technology, the Bitcoin halving is a measure designed to limit the supply of Bitcoin and maintain its value. This event occurs every 210.000 mined blocks, meaning the amount of Bitcoin rewarded for each block is halved. This is aimed at controlling Bitcoin inflation and ensuring its scarcity. However, it can also lead to a decrease in the profitability of Bitcoin mining and an increase in competition among miners, which will have a strong impact on rewards.
In addition to all this, the JPMorgan report highlights that, based on the current price of Bitcoin, the four-year block reward potential for miners amounts to approximately $20 billion. That's a sharp decline of about 72% from its peak of nearly $73.000 billion just over two years ago.
Better operational efficiency
On the other hand, JPMorgan analysts Reginald Smith and Charles Pearce favor mining operators with the best value in terms of their existing hash rate, operational efficiency, energy contracts, funded growth plans and liquidity.
The reduction in miner reward can lead to greater efficiency in the network, as only the most efficient miners will be able to survive in the market. Miners who have higher production costs will have difficulty maintaining their operations and will therefore have to close their mines. This means that only the most efficient and profitable miners will remain on the network, which could lead to greater stability and security of the Bitcoin network.
Furthermore, the reduction in the miner reward can also lead to an increase in the price of Bitcoin. The decrease in Bitcoin supply due to the halving may cause the price to increase, which would benefit investors and miners who survive the event.
In summary, the Bitcoin halving in 2024 may seem like discouraging news, but it can actually lead to greater operational efficiency and stability in the Bitcoin network. Miners and investors should consider the opportunities this event presents and take steps to protect their profitability. Ultimately, the halving aims to control inflation and maintain the integrity and valuation of Bitcoin over time.
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