Bitcoin Mining Outlook 2024
The Bitcoin mining industry faces a pivotal year in 2024, marked by the Fourth Halving and shifting global dynamics. Colin Harper’s analysis on Hashrate Index provides insightful predictions for the sector. The Halving, reducing block subsidies from 6.25 BTC to 3.125 BTC, will drastically slash mining revenues, prompting miners to adapt quickly, according to Hashrate Index.
Global Hashrate Redistribution
One key prediction is the decentralization of Bitcoin’s hashrate. North America, which gained dominance following China‘s 2021 mining ban, may see its share decline post-Halving. Miners will likely seek regions with cheaper electricity, such as South America and Africa, as reduced block rewards put pressure on their margins.
Impact on Retail Hosting
The retail hosting market in North America and beyond is expected to contract. Lower mining margins, driven by halving and hosting rates averaging $0.078/kWh in the US and $0.072/kWh in Canada, will make survival challenging for hosted miners with average or higher costs.
Acquisitions and Distressed Asset Sales
The compressed hashprice environment in 2024 is anticipated to trigger a surge in mergers, acquisitions, and distressed asset sales. This trend echoes the events of 2022, which saw major industry shifts like Compute North’s bankruptcy and significant asset sales by firms like Argo.
Bitcoin Mining Stocks and ETFs
Bitcoin mining stocks, historically seen as high beta plays to bitcoin, might lose some of their price premiums. The approval of bitcoin ETFs provides investors with more direct exposure to bitcoin, potentially reducing the appeal of mining stocks as alternative investment vehicles.
Transaction Fees and Inscriptions
A notable development in 2023 was the rise of Bitcoin-based NFTs and inscriptions, which significantly boosted transaction fees. With $188 million generated in transaction fees from inscriptions in late 2022 and 2023, this trend is expected to continue in 2024, offering an alternative revenue stream for miners.
In summary, 2024 presents a mixed bag for Bitcoin miners. The Halving poses significant challenges, but opportunities in new markets, transaction fees, and strategic mergers could pave the way for a resilient and more geographically diverse mining landscape.
