Bitcoin Miners Struggle Post-Halving, Kaiko Analysis Reveals: Here’s Why (BTC)

• Bitcoin mining revenue is experiencing a significant decline following the halving event at the end of April.
• Miners are grappling with reduced token rewards, which have significant impacts on market liquidity and trading activity.
• Despite the recent revenue decline, Bitcoin miners have shown a tendency to hold onto their reserves, contrary to the sell-offs observed during the 2022 crypto market downturn.

Bitcoin miners are facing increased pressure due to reduced token rewards, leading to a significant decline in revenue. Despite this, miners are holding onto their reserves, indicating renewed confidence in the digital asset market.

Bitcoin Mining Revenue Takes a Hit

Bitcoin mining revenue is experiencing a significant decline following the halving event at the end of April. This event, known as halving, occurs approximately every four years and reduces mining rewards by half. The most recent halving, the fourth since 2012, reduced daily production from 900 tokens to 450, resulting in an annual income loss of approximately $10 billion at the prevailing prices at that time.

Miners Grapple with Reduced Rewards

Bitcoin miners are grappling with reduced token rewards, which have significant impacts on market liquidity and trading activity. In response to this income decline, miners have tried to compensate for their losses by benefiting from transaction fees, an alternative income stream beyond mining subsidies. However, partly due to the launch of memecoins on the Bitcoin network, the increase in transaction fees observed after the halving has since decreased, contributing to further income issues for miners.

Miners Hold onto Reserves Despite Decline

Despite the recent revenue decline, Bitcoin miners have shown a tendency to hold onto their reserves, contrary to the sell-offs observed during the 2022 crypto market downturn. In the past two years, major Bitcoin mining companies like Marathon Digital and Riot Blockchain have increased their assets, indicating renewed confidence in the digital asset market. According to data from Kaiko, Marathon owns 17,631 Bitcoins worth over $1.1 billion, while Riot owns 8,872 Bitcoins worth over $500 million.

Conclusion

While the current scenario presents challenges for Bitcoin miners, their decision to hold onto their reserves indicates a positive outlook for the cryptocurrency market. As the industry navigates the seasonal slowdown in trading activity and liquidity typically observed in the summer months, the resilience of Bitcoin miners could potentially signal a bullish trend for the digital asset market.