For many months, members of the Bitcoin community have been forecasting an impending bull run as a result of the upcoming halving event expected to take place later this year. However, the recent price slump of the coin may have altered that narrative as miners are currently facing deep cuts in profits.
The head of research at digital-asset manager CoinShares, Chris Bendiksen, said the fallen price had caused miners whose computers provide a third of all the power for the network, to see great losses.
This is a big plunge for miners, also coming like bad timing, as they must have been optimistic about the fast approaching halving event that would split the block rewards from 12.5BTC to 6.25BTC. They believe the event would lead to a significant price increase in the value of Bitcoin.
Sadly, a price plunge calls for further losses since mining rewards would automatically drop in half after the halving event. Hence, the fall in the price of Bitcoin is a blow to the face of the exciting expectations that usually comes with halving.
An analyst at crypto research firm Messari, Ryan Watkins, said it has just really damaged the narrations that people have been making about Bitcoin halving, adding that;
People were expecting price increases either before or after the halving, whereas now it seems like the exact opposite is going to happen.
BTC needs to trade above $7400
Chris Bendiksen said that the price of Bitcoin has to be around $7,400 for an average miner to make profits. He added that the price being around $4,500 dollars makes an average miner become Cash-flow negative.
The only hope miners are looking up to is a price rally. Due to this expectation, miners would slow down in shutting their facilities. However, if the price does not rally as expected, some miners are likely to shut down after the halving occurs.
Moreso, if the rally doesn’t occur and miners end up shutting operations, it could also decrease the security of the Bitcoin network. Since miners’ machines are used to confirm Bitcoin transactions, and then fewer miners are left to safeguard the network, it would create rooms for a few bad actors to start double-spending coins, with much ease.