From holding to selling: Bitcoin miners adjust tactics post-halving

• Bitcoin miners confront uncertainties amidst price surges preceding the fourth halving.
• Strategic decisions on Bitcoin holdings and regulatory challenges impact mining profitability.

Amidst the dynamic landscape of the cryptocurrency market, Bitcoin [BTC] miners find themselves at a crossroads. The fourth halving saw a departure from the norm as Bitcoin’s price surged beforehand, sparking speculation within the industry.

With Bitcoin hitting new all-time highs even before the halving, there was a looming question: is this a boon or a bane for miners? 

Bitcoin halving impacts miners 

Shedding light on the same, Adam Sullivan, the CEO at Core Scientific, one of the largest Bitcoin miners in North America, in a recent conversation with Anthony Pompliano, said, 

“I think one of the big questions is the ETF, the mechanism for Bitcoin to go even more parabolic post having, in a way where it’s allowing more institutional investors, more retail investors access to the market.”

Drawing parallels with the previous cycles, he added, 

“So as we look forward post having, we’re looking at a point where a lot of miners are going to be marginally profitable and they’re going to stay online for kind of three to six months. So, I think we’re going to see a much more drawn-out process unlike 2022.” 

This underlines that, the post-halving adjustment period may be prolonged, with miners staying online for longer despite marginal profitability.

Hence, this could lead to a slower process of consolidation and potential failures within the mining sector, possibly extending into 2025. 

Bitcoin miners strategy 

Additionally, talking about the strategy concerning Bitcoin holdings for mining operations, the one prominent question that arises is whether one should hold or sell mined Bitcoins amidst market volatility. 

In response, Sullivan said, 

“We are currently selling our Bitcoin on a daily basis.” 

With his remarks he emphasized on minimizing opportunity costs and maximizing shareholder value rather than accumulating Bitcoin for personal sake. 

This was further confirmed by Bitbo data, highlighting a 2% surge in Bitcoin mining difficulty, reaching a record 88.1 trillion at block height 840,672.

Source: Bitbo

Despite this, The Block’s data indicates that miners maintain stable revenue post-halving.

According to the graph, transaction fee rewards now make up 40% of total block rewards, up from 10% pre-halving, indicating a significant shift in revenue sources for miners.

Source: The Block

Joe Biden’s big move 

Interestingly, Joe Biden also imposed a 30% tax on Bitcoin miners, which was further criticised by Senator Cynthia Lummis. 

“It would be a historic mistake to slap Bitcoin miners with a 30% tax that is a de facto ban.” 

Overall, these developments underscore the complex interplay between market dynamics, regulatory actions, and strategic decision-making within the Bitcoin mining ecosystem

. Ergo, it would be interesting to watch how will things unfold for miners in the coming days, weeks or months.