‘There’s No Guarantee’ That Bitcoin Halving Will Favor Miners: Riot Platforms

‘There’s No Guarantee’ That Bitcoin Halving Will Favor Miners: Riot Platforms
‘There’s No Guarantee’ That Bitcoin Halving Will Favor Miners: Riot Platforms

Riot Platforms, one of the largest Bitcoin mining facilities in the world, has warned shareholders that there is no “guarantee” that theBitcoin halving have a positive impact on your profitability.

About every four years, Bitcoin is scheduled for a “halving” that halves the reward for mining new blocks as a way to keep inflation under control. The next Bitcoin halving is scheduled to take place sometime in april with some speculators thinking that Bitcoin price will increase.

But Riot Platforms is warning investors not to get too excited.

“While Bitcoin prices have historically increased around these halving events, there is no guarantee that the price change will be favorable or offset the reduction in mining rewards.” Riot said in his 2023 annual report.

“The revenue we earn from our Bitcoin mining operations would see a decline,” Riot added, “which could have a material adverse effect on our operating results and financial condition.”

For a miner to get a block reward, they must solve a complex cryptographic puzzle that requires a lot of electricity, that has been one of the longest lasting criticism to the consensus mechanism of work test. Furthermore, it is believed that the halving will increase this demand for electricity, which in turn will increase expenses.

“Many miners now find it unviable to remain profitable due to current electricity rates,” Aki Balogh, co-founder and CEO of the Bitcoin smart contract provider, told Decrypt. DLC.Link. “The halving It will essentially double the amount of electricity to produce the same amount of Bitcoin. The rate remains the same, but the profitability of the miners is reduced by half,” he added.

As a result, miners are worried about their profit margins. Likewise, experts are especially concerned about lower-tier miners with inefficient machines.

“Miners with efficient operations, that is, with low energy costs and the latest generation of ASICswill continue to operate, while it is likely that [los mineros que cuenten con] “Previous generations of ASICs become unprofitable and shut down for economic reasons,” Matthew Niemerg, co-founder of the layer 1 blockchain network, told Decrypt. Aleph Zero.

“How to prepare? Prepare to close unprofitable machines,” he added.

From the last halving In May 2020, more miners have entered the crypto space, increasing the hash rate, a measure of how much computing power is being used to mine at any given time.

“With increased competition in the miner space, we saw the hash rate increase more than five times since the last halving,” he told Decrypt Greg Beard, CEO and president of Stronghold Digital Mining. “So while everyone is excited about the halving, we have already seen a quarter of the mining economy decline as miners added capacity to their machines without the price of Bitcoin keeping pace.”

This means that now, more than ever, mining efficiency is a high priority.

“The halving will be more favorable for miners with a low energy cost,” Beard explained. “The miners that can keep costs down will be the miners that benefit from the halving as the price of Bitcoin rises.”

Despite expert predictions suggesting that less efficient miners may have to shut down operations, Riot Platforms predicted that the global hash rate will continue to increase.

“We expect demand for new Bitcoin to also increase as more mining companies are attracted to the industry by this increased demand,” Riot’s report said. “Therefore, as new and existing miners deploy more hash rate, the global network hash rate will continue to increase, meaning that a miner’s share of the global network hash rate (and “Therefore, your probability of earning Bitcoin rewards will decrease.”

As miners look for more efficient options, the industry could accelerate a shift toward a renewable energy to reduce energy costs, or encourage innovation for new low-cost mining machines.

Edited by Andrew Hayward

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