What is the Market Situation After the Bitcoin Halving?
Bitcoin successfully completed its fourth halving on April 20. After the halving, block rewards have decreased to 3.125 BTC. The halving will first affect the mining industry, as miner income will sharply decrease in the short term. Additionally, the halving will also impact Bitcoin’s inflation rate, as the increase in scarcity is expected to drive up the price further.
However, the reality is that since the halving, Bitcoin has remained in a high-level consolidation phase, with a slight decrease of 3.87% in price. This puts pressure on miners and has caused losses for many short-term investors.
In essence, each halving is another dynamic balance of market supply and demand. In this process of rebalancing, what are the trends in market funds worth paying attention to? What specific pressures does the mining industry face? What is the current demand situation for Bitcoin?
Further reading:
Illustration | Understanding “Bitcoin Halving” at Once! Analysis: What is halving? What does it have to do with me? Will the price rise?
PAData, a data column under PANews, has conducted a comprehensive analysis of current market data, mining data, and other demand-side data. The findings are as follows:
Since March, the proportion of Bitcoin’s loss chips has continuously increased from 1.28% to 15.18%. After the halving, the average SOPR index for short-term investors is 0.99972, indicating that many short-term investors have suffered losses due to the expectation of reduced production.
After the halving, the on-chain token circulation rate has dropped by 23%, indicating that more chips are being accumulated. From a time perspective, there has been a significant increase in the number of chips held for 1-3 months, 3-6 months, and 3-5 years. Looking at the balances of different holding addresses, the number of addresses with balances between 100 BTC and 1000 BTC, as well as 1000 BTC and 10000 BTC, has increased by more than 1.3%.
After the halving, miners are facing greater revenue pressure. Based on the current price and higher electricity costs, the shutdown price is estimated to be $55,000, a significant increase from the lowest shutdown price of $14,300 in August last year.
The current total daily mining revenue is approximately $26.48 million, a decrease of 51.63% from the average daily revenue of $54.76 million before the halving. The current daily transaction fees are approximately $2.28 million, a decrease of 34% from the average daily fees before the halving.
Assuming that transaction fee income remains unchanged, meaning maintaining the current average transaction fee and number of transactions, to achieve the pre-halving average daily revenue level, the price would need to reach $94,489.82, an increase of 51.63% from the current price.
Assuming that the price remains unchanged, to achieve the pre-halving average daily revenue level, the number of transactions would need to reach 1.67 million, an increase of 202.49% from the post-halving average, or the average transaction fee would need to reach 0.00080317 BTC, an increase of 206.08% from the post-halving average.
The initial strong demand for Runes was able to bring huge profits to miners. On the first day of its launch, Runes contributed 881 BTC in transaction fees.
01. After the halving, the proportion of loss chips has increased to 15%, and the number of large-holding addresses with over 100 BTC has significantly increased.
A potential market consensus is that the price of Bitcoin will rise significantly after the halving. Historical data shows that the price of Bitcoin has increased by 8069.11%, 256.85%, and 478.10% respectively in the year (365 days) after the past three halvings.
However, in the short term, the impact of the halving on the price of Bitcoin is slow. In the short term (17 days) after the past three halvings, the price of Bitcoin increased by 9.73%, 0.97%, and 6.98% respectively. But since the halving, Bitcoin has remained in a high-level consolidation phase, currently around $62,400, with a decline of about 3.87%.
The lower-than-expected price has led to a significant increase in the proportion of loss chips in the market. Since the halving, the price of Bitcoin has been consolidating above $62,500, while the proportion of loss chips has increased from 10.95% to 15.18%. In fact, the increase in the proportion of loss chips began before the halving. Since March, the price of Bitcoin has been consolidating above $62,500, while the proportion of loss chips has continuously increased from 1.28%.
This means that many short-term investors have suffered losses due to the expectation of reduced production.
This possibility is also indirectly confirmed by the SOPR index of short-term investors. The index is less than 1, indicating an overall loss for investors who hold coins for more than 1 hour but less than 155 days.
According to CryptoQuant’s data, the current index is 1.0022, very close to 1, and the average index after the halving is 0.99972, indicating that short-term investors have experienced overall losses in the recent period.
While the price is low, the circulation speed of chips on the chain has also significantly slowed down. According to glassnode’s data, the current circulation rate (7-day average) is 0.01044, a decrease of nearly 23% from the rate on the day of the halving, and a decrease of nearly 33% from the beginning of the year.
The rapid decline in circulation speed may indicate that more chips are being accumulated. From a time perspective, there has been a significant increase in the number of chips held for 1-3 months, 3-6 months, and 3-5 years since the beginning of the year. Especially for chips held for 1-3 months, there has been a 7.14% increase this year and a 2.44% increase after the halving, indicating a trend of accumulation from the short term to the medium term.
Looking at different balance ranges of holding addresses, there has been a significant increase in the number of addresses with balances between 100 BTC and 1000 BTC, as well as 1000 BTC and 10000 BTC since the beginning of the year. The increase is 1.35% and 1.39% respectively, and this phenomenon continues after the halving. Among all addresses, the number of addresses with balances between 1000 BTC and 10000 BTC has increased by 1.07%.
These data indicate an increase in the number of large-scale holders, and chips are being accumulated.
02. After the halving, hash rate decreased by over 7%, and daily mining revenue decreased to $26.49 million.
After the Bitcoin halving, the total network hash rate (7-day average) has seen a significant decrease. According to glassnode’s data, the current hash rate is 582.2 EH/s, a decrease of 7.43% from the day of the halving. The decrease in hash rate is greater than the decrease in price, which may indicate that miners have shut down some mining machines to maintain profitability.
According to data from f2pool, miners are facing greater revenue pressure based on the shutdown price of different mining machines. Calculated based on the price of $62,315.29 on the day of data collection, if the mining machines are located in areas with lower electricity costs and charged $0.07 per kWh, there are still 31 types of mining machine models that can remain profitable with a shutdown price lower than the current price. Among them, the Antminer S21Pro has the lowest shutdown price at $32,200, with a daily net revenue of $5.52. According to BTC.com’s data, the lowest shutdown price was still at $14,300 in August last year.
If the mining machines are located in areas with higher electricity costs and charged $0.12 per kWh, there are only 3 types of mining machine models that can remain profitable: Antminer S21Pro, Antminer S21 Hyd, and Antminer S21, with shutdown prices above $55,200.
If the current market conditions do not improve, the electricity cost becomes a crucial factor determining the life or death of miners. If the market conditions improve, to what extent can the pressure on miners be alleviated?
Assuming the electricity cost remains low, when the price rises to $80,000, the number of profitable mining machine models will reach 45, with the Antminer S21Pro still having the lowest shutdown price, and the highest daily net revenue being $12.30 for the Shenma M63S (390T). When the price rises to $100,000, the number of profitable mining machine models will reach 66, with the Antminer S21Pro still having the lowest shutdown price, and the highest daily net revenue being $18.41 for the Shenma M63S (390T). As the price rises, miners will have a wider range of mining machine models to choose from and can diversify their configurations.
After the halving, mining revenue has significantly decreased. According to CryptoQuant’s data, the current total daily mining revenue is approximately $26.49 million, a decrease of 51.63% from the average daily revenue of $54.76 million before the halving. However, it is worth noting that on the day of the halving, the launch of the Runes protocol contributed to a daily mining revenue of approximately $107 million, an increase of 95.06% from the average daily revenue before the halving.
The strong increase in on-chain demand can offset the losses for miners caused by the halving. On the day of the Runes protocol launch, transaction fees reached $80.58 million, accounting for 75% of the total revenue. But as the heat of Runes cools down and transaction volume decreases, the current daily transaction fees are approximately $2.28 million, a decrease of 34% from the average daily fees before the halving.
Miner mining revenue (in USD) = (block reward + transaction fees) * price
So, the decrease in miner revenue due to the halving can be compensated in two ways:
1. Assuming transaction fee income remains unchanged, a significant increase in the price is needed.
2. Assuming the price remains stable, a significant and sustained increase in transaction fee income is needed.
Of course, this is a static and simplified analysis, aiming to demonstrate the potential impact of the Bitcoin halving on price and transactions.
According to CryptoQuant’s data, the average daily mining revenue before the halving was $54.76 million, and after the halving, the average daily block count is 139, resulting in an average block reward of 434.23 BTC. The average transaction fee per transaction is 0.0002624 BTC, and the average daily number of transactions is 553,328.19.
Assuming transaction fee income remains unchanged, maintaining the current average transaction fee and number of transactions, to achieve the pre-halving average daily revenue level, the price would need to reach $94,489.82, an increase of 51.63% from the current price.
Assuming the price remains unchanged while maintaining the current number of transactions, to achieve the pre-halving average daily revenue level, the number of transactions would need to reach 1.67 million, an increase of 202.49% from the post-halving average, or the average transaction fee would need to reach 0.00080317 BTC, an increase of 206.08% from the post-halving average.
03. Bitcoin’s demand side is still weak, TVL and Runes data decline
Estimating the impact of the halving on the mining industry is crucial, as unprofitable miners pose a threat to the underlying security of the blockchain. In addition to the price, transaction fees and the number of transactions are direct manifestations of demand. So, what is the current demand situation for Bitcoin?
Looking at Runes, according to the data from @cryptokoryo on Dune Analytics, the number of related transactions has decreased from an initial 463,600 to the current 79,400, and the generated transaction fees have decreased from 881 BTC to the current 4 BTC. From the daily mining revenue, it can be seen that the initial strong demand for Runes was able to bring huge profits to miners. The current problem is how to maintain the sustainability of demand for various Bitcoin projects such as Runes.
In addition, the DeFi imagination brought by Bitcoin’s Layer2 and Runes could potentially stimulate more usage demand. From the current situation, according to DefiLIama’s statistics, the current TVL on the Bitcoin chain has reached $1.208 billion, an increase of 296% since the beginning of the year, and has remained relatively stable after the halving. Among them, in addition to the Lightning Network, the recently launched AINN Layer2 has also performed well, with the current TVL reaching $590 million, becoming a major application in the Bitcoin ecosystem. Additionally, applications such as BiFi, Maya Protocol, and BoringDAO have also achieved rapid growth in TVL this year.
This article is a collaborative publication with authorization from PANews.
