Will Bitcoin Mining Still Be Worth It After The 2024 Halving?

Apr 17, 2024 by Humberto Aguilar
This article was written as a special piece by Humberto Aguilar, Paystand's Director of Engineering in Engineering Operations.


What is Bitcoin Halving?

The Bitcoin halving is a scheduled event that occurs “approximately” every four years, or every 210,000 mined blocks. During the halving event, the miners' reward for validating and adding a new block to the Bitcoin blockchain is halved.

Most people have highly varied opinions regarding how Bitcoin halving works, depending on their knowledge of the subject.

  • Bitcoin enthusiasts think that it is a positive event that is associated with a significant increase in Bitcoin's price.
  • Skeptics think that the halving is already built into Bitcoin's price before it occurs and do not consider it a guarantee that the price will increase in the short term.
  • The technological ones are interested in how it will affect the network's security and Bitcoin's integrity.

When is the Next Bitcoin Halving?

It is widely known that the 2024 halving occurred on April 19th, 2024. The halving reward will drop approximately 3,125 bitcoins.

The halving after the 2024 halving will take place around April of 2028.

What is the Purpose of Halving?

The primary purpose of the halving is to limit the supply of new bitcoins entering the market over time and control the cryptocurrency's inflation. By reducing the rate at which new bitcoins are created, the halving helps maintain scarcity and demand for the cryptocurrency, which can impact its price in the long run.

Halving affects Bitcoin by potentially increasing its value over time due to the reduced supply of new coins entering the market, aligning with the principles of supply and demand. 

The History of Bitcoin Halvings

This event is essential to Bitcoin's deflationary nature, making it an intriguing asset that mimics the scarcity properties of precious metals like gold.

Bitcoin, like FIAT currencies, shares certain behaviors that must be controlled. One of them, and the most important one, is printing, which generates inflation.

Much has been said that one of Bitcoin's strengths is that it does not generate inflation because it is finite—21,000,000. However, it is not finite yet; it is in the process. Therefore, halving is a method that must happen to benefit and control Bitcoin inflation.

Currently, there is a total creation of 19,591,231 Bitcoin.

The halving method is doing what central banks do to FIAT currency, controlling the currency's value. Reducing the rate of Bitcoin creation contributes to digital scarcity and helps keep the creation supply under control.

Why is the Halving Relevant to Companies?

Today, companies that have been understanding the behavior and importance of cryptocurrencies are beginning to invest in buying Bitcoin as an asset or in mining.

Some technology companies have created an account in their accounting scheme to acquire Bitcoins as a savings asset.

The halving is important for companies as it impacts the Bitcoin ecosystem and the companies that operate in it. Price, profitability, and perception are valuable aspects.

It is important for companies dedicated to Bitcoin mining to know that the halving affects the less productive or less efficient miners. Although the production cost is the same, the reward is lower, which causes profitability to be very high. Many companies that operate with inefficient miners will stop producing bitcoins.

This also helps clean up the miner base in the world, as companies turn off less efficient miners and the total hashrate is significantly reduced, thus helping in the calculation and strategic planning of the operation.

It also allows companies to manage risk, planning, and decision-making for subsequent investments.

First and foremost, companies should recognize that halving plays a crucial and intelligent role in preventing inflation within cryptocurrency markets. This mechanism not only signifies trust and stability but also underscores the inherent design to sustain the currency's value over time.

So Will Mining Still be Worth it?

As of the date of publishing, early April 2024, yes. Today, mining is still worthwhile; the price is amazing (around 65K to 70K), the cost of electricity is going down because some countries support mining, and the transactions are growing exponentially. Competition in hosting services is very strong. We can predict that if the operational cost is the same, and Bitcoin price remains above $54,000.00 after the halving, then Bitcoin is still worth mining.

Halving is an inevitable process, and rather than avoiding it, investors must comprehend its implications and strategize on how to leverage this event to their advantage. Understanding halving allows investors to make informed decisions, potentially turning this periodic adjustment into an opportunity for growth and profit in their investment portfolio.