JPMorgan’s latest report has unveiled a projection of a potential 20% decline in the Bitcoin Network Hash Rate following the anticipated Bitcoin halving event set for April 2024.
The report speculates that as much as 80 EH/s, equivalent to 20% of the network’s total hash rate, could be removed in the wake of the next halving scheduled for April ’24. This reduction is expected to occur as less efficient mining hardware is phased out.
This forecast underscores a significant drop in Bitcoin’s hash rate, and the report characterizes the Bitcoin mining industry as being at a critical juncture in the run-up to the upcoming halving event. The Bitcoin halving, occurring every four years, involves a 50% reduction in rewards for Bitcoin miners and aims to control inflation. The fourth halving is slated for April 2024.
The report goes on to highlight the four-year block reward opportunity, which is estimated to be around $20 billion based on the current price of Bitcoin. However, it notes that this figure represents a substantial decrease of approximately 72% from just over two years ago when it reached a peak of roughly $73 billion in April ’21. In the past year, it has fluctuated between $14 billion and $25 billion.
As of the time of this report, the price of Bitcoin stands at $26,778.
In their evaluation of various Bitcoin mining firms, JPMorgan has listed several players in the field but singles out CleanSpark as their preferred choice. They believe CleanSpark offers the best balance in terms of scale, growth potential, power costs, and relative value. Conversely, while Marathon Digital is the largest operator, it incurs the highest energy costs and has the lowest profit margins.
Marathon Digital provides an operational overview on its website, although it emphasizes that the figures are approximations. According to the company, it currently boasts around 155,910 operational miners worldwide. Riot Platforms, on the other hand, is seen as having relatively low power costs and strong liquidity.
Contrary to conventional wisdom, recent online discussions have raised doubts about the correlation between Bitcoin’s four-year cycles and its halving events. Some Bitcoin enthusiasts, like ‘Pledditor,’ argue that these cycles are mere coincidences and have little to do with the halvings.
Nevertheless, the upcoming halving continues to generate enthusiasm among Bitcoin mining firms. Notably, Blockstream, a Bitcoin infrastructure company, has been actively acquiring Bitcoin mining rigs with the expectation that these assets will appreciate in value following the April 2024 halving, as reported on August 16 by BeInCrypto.