FIDELITY: MINERS MUST READY FOR IMMINENT BITCOIN HALVING 

The briefing stresses the importance of miners’ preparation for profitability beyond just holding their spot in the network.

Fidelity Digital Assets has released a report indicating that while Bitcoin (BTC) enthusiasts often look forward to the halving event every four years for potential price increases, miners should take deliberate steps to ensure they remain solvent following the halving, which will slash their Bitcoin rewards by half around April 19.

Challenges for Bitcoin Miners With Halving Approaching

Daniel Gray, an analyst at Fidelity, pointed out that to stay profitable, miners need to keep up with their current hash rate, manage energy costs effectively, maintain their infrastructure, and navigate the competitive landscape of the mining network, which is all aiming to stay profitable under similar constraints.

The persistence of miners in the face of these challenges is often driven by their belief in Bitcoin’s long-term value increase. However, the report underlines the necessity for miners to actively enhance their operations rather than just hold their network status to achieve profitability.

Gray notes the importance for miners to improve hash rate efficiency, seek out more affordable energy sources, and invest in expanding their infrastructure to support new equipment. The competitive nature of mining means that all miners are in pursuit of these same advantages.

The report by Fidelity also mentions the difficulties miners might face immediately after the halving, as they adjust to a significant decrease in earnings. It suggests having capital reserves to mitigate the impact of reduced income.

Additionally, the evolution of the Bitcoin protocol could bring in new applications and attract more users, potentially offering more opportunities for miners. Despite historical trends showing some miners exiting the industry after halvings, the sector has always managed to recover, demonstrating the resilience of both the network and the mining community.

Previous halvings in 2012 and 2016 resulted in a temporary decline in hashrate, which eventually recovered.

Potential Impact on Bitcoin PricesRecent spikes in Bitcoin’s price to beyond $69,000 have been significant, yet analysts from JPMorgan have raised concerns that the upcoming halving could pressure prices downwards, potentially leading to a price correction to $42,000.

They argue that the cost of producing Bitcoin typically sets a price floor, which could rise to about $53,000 after the halving, possibly leading to a reduction in the network’s hashrate as the competition among miners decreases. The anticipated stabilization price of $42,000 post-halving reflects the analysts’ expectations for Bitcoin’s price adjustment once the initial excitement over the halving wanes.

Luxor’s head of marketing, Alessandro Cecere, suggests that despite the reduction in mining rewards, miners could still find profitability sustainable if Bitcoin’s price were to reach $100,000, thus balancing their earnings over time.

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