Post Halving Mining Profitability

As with many asset classes around the world, Digital Assets, specifically Bitcoin, experienced yet another historic drop in March from around $10,000 in February to almost as low as $3,500 on some exchanges. To date, Bitcoin has rebounded both in price and network hashrate to pre-COVID levels. Although Bitcoin is struggling to break free of the $10,000 resistance level seen pre-pandemic, this still points to the resiliency of the ecosystem. 

 

On the user side, the number of active addresses is at a level only seen twice before in the asset’s history. On the mining side, operators are reporting strong mining profits despite the halving event in May, contrary to the “mining death spiral” hypothesis proposed by a few speculators in the space. Specifically, miners in China are reporting profitable mining levels sub $6,000, due to lower operating costs as a result of it being the rainy season, reducing the cost of electricity thanks to hydroelectric power. This furthers the narrative that low energy costs and advancements with next-gen miners continue to be a driving factor in mining profitability. 

 

The current state also shows promise in North America with cheaper natural gas being utilized as an energy source for the next generation of miners. The disruption in the oil and gas markets has provided opportunities for miners to partner with energy providers to lower the cost of power. This confluence of technological innovation and cheap power helps miners deal with known events such as the halving. 

 

By nature, mining companies have to be very dynamic and responsive to changes in the marketplace. The recent display of innovation and resiliency from miners is just one more exercise in which miners have shown they have the capability and maturity to handle whatever is thrown at them.